China's much-anticipated stock trading board for promising high-tech startups gets off to a resounding start, as the Shanghai-based bourse will greet 21 IPOs this week.
The authorities in Beijing aspire to raise funds directly from stocks sale to groom a boom of technology ventures in China. A mushroom of high-tech companies will place China in a better position to compete with the United States, as the two countries are currently engaged in a fierce contest for technology supremacy.
Investors are now casting covetous eyes on an IPO subscription of stocks soon to be listed on the science and technology innovation board, reflecting domestic investors' high expectations of the new board.
The first batch of the science and technology innovation board's IPO fundraising is coming to a peak period this week, with 21 technology companieslaunching IPO subscriptionsfrom Monday to Friday. Before that, between June 17 and July 3, four companies to be listed on the board have already completed IPO fundraising.
The new board will officially commence public trading on July 22, the Shanghai Stock Exchange announced on Friday.
A Shanghai-based investor surnamed Dai said that she is ready to try her luck at this week's IPO subscription. Last week, she applied to purchase the stocks of HYC Technology, pitched as the "the first share on the science and technology innovation board", but failed.
According to media reports, the average purchasing lottery rate of the four aforementioned high-tech stocks that have completed IPO fundraising is about 0.058 percent, slightly higher than the 0.041 percent lottery rate of IPO subscription on the A-share markets.
Dai said that she is confident about making money via IPO subscription on the science and technology innovation board. "Issue price is usually at a low point, not to mention that the new board stocks are few in number.Science and technology is a hot theme and there must be capital anxious to get in," she told the Global Times on Monday.
Of the four science and technology innovation board stocks that have completed IPO fundraising, three have raised funds exceeding their initial plans. For example, the YantaiRaytron Technology Co has raised IPO funds of 1.2 billion yuan ($0.17 billion), more than 2.5 times higher than their planned fundraising amount of 450 million yuan, according to a report of the Beijing News.
"This over-fundraising trend is likely to continue this week," Dong Dengxin, director of the Financial Securities Institute at the Wuhan University of Science and Technology, told the Global Times on Monday.
He said this phenomenon "reflects domestic investors' anticipation for the upcoming new board" at a time when they are thirsty for good investment targets."
"I think it reflects a slight imbalance between supply and demand on the markets, which is very normal," he said.
But Dong cautioned that there's also the possibility that some of those companies' stocks might drop below their IPO issue price on their first day as public companies.
"Investors must be particularly aware of the fact that they are accountable for any loss of their investment on the new board, which is almost clear of administrative supervision. However, since the investors on the new board are mostly composed of institutional investors, and their risk-bearing and valuation capabilities are much higher than individual investors,there's no need to worry too much about excessive fluctuations on the new board," he said.
