China's Nasdaq-style board off to soaring start

Shares soared in a wild first day of trading on China's long-awaited Nasdaq-style board Friday, with all 28 listed small and medium-sized firms rocketing on fevered interest from investors.

Trading in all shares on the ChiNext in the southern boomtown of Shenzhen was suspended at least once as market circuit-breakers in place to curb rampant speculation were tripped.

Chengdu Geeya Technology Co Ltd, which makes digital television decoder boxes, posted the biggest gains of the day, finishing up 209.73 percent from its initial public offering (IPO) price at 35.0 yuan.

Anhui Anke Biotechnology (Group) Ltd. closed at 50.08 yuan, up nearly 200 percent from its IPO price. Movie production house Huayi Brothers Media Corp. soared 147.76 percent from its IPO price of 28.58 yuan to close at 70.81.

All shares were up at least 75 percent from their IPO price in their debut.

"The wild ride was expected just as it happened on the opening day of the Nasdaq," said Wu Dazhong, a Shenzhen-based analyst at Shenyin Wanguo Securities.

"These companies need to find their real values on the new market -- I don't think the upward momentum will be sustained too long into the future."

ChiNext is expected to give small- and medium-sized companies access to financing and encourage private equity firms and venture capitalists to back start-ups.

Regulators hope the new growth enterprise market (GEM) will help fuel young companies and other firms with high-growth potential in the world's third-largest economy, following the example of Wall Street's Nasdaq.

"The People's Bank of China and the entire financial system will continue to pay attention to and support the development of the ChiNext market," central bank governor Zhou Xiaochuan was quoted by state Xinhua news agency as saying.

But there have also been worries that the new board may divert funds from the main boards and drag down stock prices.

The Shanghai bourse closed up 1.20 percent on Friday.

Yu Zuojie, an analyst with Shanghai Securities, said he expected calmer trading in the coming days.

"Performance of the GEM stocks will be more diversified next week and the board is unlikely to stage another sharp rise," Yu told AFP.

The first 28 companies to list on the board, ranging from software to medical equipment makers, raised about 16 billion yuan (2.3 billion dollars) in their IPOs -- more than double initial forecasts.

The China Securities Regulatory Commission was due to meet Monday to consider IPO applications from three more companies.

Commission chairman Shang Fulin last week cautioned investors to trade on ChiNext in a "rational" way, recognising that start-up stocks have potential for strong growth but are also characterised by unstable financial results.

"The growth enterprise market faces relatively higher risks of irrational and speculative trading and market manipulation," he said.

For shares that moved up or down 80 percent on Friday, trading was suspended until the final three minutes of the session.

Two other debut-day circuit-breakers were in place, under which trading was suspended for 30 minutes if shares in a company move up or down 20 percent from the opening price, and then another 30 minutes for a 50-percent shift.

ChiNext has said the restrictions will help curb risks, maintain market stability and protect investors.

Neil Katkov, senior vice president for Asia at global financial consultancy Celent in Tokyo, said ChiNext could have a troubled start, but predicted success in the long run.

"In the short run, the venture board is going to be a bumpy ride -- good for traders that thrive on volatility, but scary for buy and hold investors," Katkov said.

"In the long run, the fundamentals of China's growth economy mean the exchange stands a good chance of fulfilling its stated purpose of driving the development of new economy sectors such as infotech and biotechnology."