Stocks rocketed by as much as 520 percent on the first trading day of the Shanghai Science and Technology Focused Stock Market in what the Chinese government hopes is a further sign of its resilience in the face of its trade war with the United States.
Star Market was announced by President Xi Jinping less than a year ago and has been billed as China's response to Nasdaq, the technologically dominant US stock market.
Beijing hopes it will encourage investment in domestic technology companies, and also cause more Chinese businesses to record at home rather than abroad, as China is trying to counteract the pressure on its technology industry from Washington, which earlier this year blacklisted the country's sector master , telecommunication equipment Huawei.
More than 1
The first 25 companies that listed on the stock exchange on Monday had gathered Rmb37bn collected through the issue of new shares which closed their first trading day on Star between 84 percent and 400 percent higher from where they had priced, with an average gain of 140 percent.
Among the companies that were to be listed on the first trading day were chip makers Anji and Montage Technology, which increased 520 per cent and 285 per cent respectively. Four of the 25 shares were up by over 200 percent at the end, with 16 shares up over 100 percent.
The sharp increases are unusual in China, where stock movements are normally capped within a range defined by the government. The Shanghai and Shenzhen stock exchanges allow the main pension rates to move 44 percent on their first trading day, after which they are limited to movements of up to 10 percent. The strong market, on the other hand, has no limits on stock price movements during the first five days of the share.
The star's first day gains come despite the intention of restricting the influence of China's retail investors, accounting for about 80 percent of sales on the Shanghai Stock Exchange, and are often more affected by momentum trading than institutional investors.
Star only gives investors a trade balance of at least Rmb500,000 and has two years of trading history.
Xi revealed the new board in November to "support Shanghai in cementing its position as an international financial center and a science and innovation hub".
The move came from the US and China trade war, with Washington threatening to increase tariffs on a number of Chinese imports. Mr Xi and US President Donald Trump agreed to resume negotiations at the G20 summit last month.
Analysts say the government's explicit support for the new technology table is seen by investors as a key feature.
"The government supports it and investors wonder that the government will support it," said Margaret Yang, market analyst with CMC Markets Singapore.
But Yang Yang warned that this may not be enough to guarantee the market's long-term prospects. "This game can continue for at least a couple of days, but in the long run it's hard to say," she said.
The new board is unique in China in the enticements it offers to attract technical companies to list, including permit two-class stocks that maintain the founders' control. Investors are also allowed to sell certain shares, a practice that is prohibited elsewhere in the country's markets.
Trinh Nguyen, senior economist at Natixis, said Beijing wanted to show domestic technology companies that capital market reforms would increase the market's role in setting stock prices as opposed to government policies.
Beijing wanted to "convince mainland tech stars that China's capital market reform has its interest in the heart," she said.