China’s low-trading shares soar 30%

“Strange” stocks skyrocketed 30% after news that China set up a new stock exchange

More than 60 “less-traded” stocks in China rose at least 10% in the afternoon session on September 6 as investors expected these stocks to soon upgrade to a new stock exchange.

Many tickers selected on NEEQ gained about 30% in the afternoon session of September 6. Photo: AFP

Last week, Chinese President Xi Jinping announced that China would set up a new stock exchange in Beijing to facilitate small and medium-sized enterprises in raising capital.

Contributing more than 80% of jobs in China, but small and medium enterprises and other private enterprises face more difficulties than state-owned enterprises in accessing capital from banks.

According to the China Securities Regulatory Commission, the new stock exchange in Beijing will be built on the foundation of National Stock Exchange and Valuation (NEEQ) also known as the “new third exchange” in China. The agency said that companies selected from the NEEQ may be eligible to list on the new stock exchange.

The China Securities Regulatory Commission also said that the new stock exchange in Beijing will complement the two stock exchanges in Shanghai and Shenzhen, and focus on small and medium-sized enterprises in the sector. innovation sector.

66 tickers selected on NEEQ all gained in the afternoon session of September 6, with nearly one-third of them gaining about 30%. Notably, shares of Speedbird Sheet Metal Manufacturing Company and Zhulaoliu Packing Food Company are two of the 10 strongest gainers today. The daily trading volume per share of this group reached millions of yuan today, while the trading value of large stocks in mainland China amounted to hundreds of millions of yuan.

To date, the launch date of the new stock exchange in Beijing has not been announced. Chinese authorities are gathering public comments on regulations for the stock exchange through September 22.

The establishment of the stock exchange in Beijing marks the latest attempt by the Chinese government to improve the domestic stock market with the orientation of acting as a financial channel for businesses.

Mainland China’s slow IPO approval system combined with high profit requirements has prompted many of the country’s large enterprises, especially tech giants like Alibaba and Tencent, to choose to list in China. New York and Hong Kong.

However, the fact that Beijing and Washington both stepped up supervision of the listing activities of Chinese companies in the US prevented the flow of Chinese IPOs into the New York market this summer.

Before that, right in the middle of the trade war with the US, China established the STAR Market Exchange in Shanghai in 2019, to attract investment in Chinese high-tech companies and help the country have a advantage in the competition with the West in technology. Since then, more than 300 technology companies have been listed on STAR Market, with a total market capitalization of more than 4.7 trillion yuan ($728 billion).

Even so, analysts still think that the STAR Market Exchange has lost its momentum amid the delayed IPO activity.

Chinese authorities have extended some experimental activities on the STAR Market Exchange, such as expanding the scope of daily stock trading to other areas in the mainland market.

Along with preparing to set up a new stock exchange in Beijing, analysts hope the move will bring a new wind of growth to the Chinese market.

Cao Yanghui, director of Nanhua Futures Broker in Hangzhou, said that the establishment of a stock exchange in Beijing shows that changes in China’s financial market are “taking place with relatively fast speed”.

“If before, people felt that the registration system (IPO) was quite far away, now it may be close,” Cao Yanghui said.