INSUBCONTINENT EXCLUSIVE:
SHANGHAI: Companies on China's new Nasdaq-style bourse retreated on Tuesday, shedding some of the massive gains made on their volatile debut
in the previous session, although all remained well above their listing prices.
While 24 out of 25 companies on the Shanghai Stock
Exchange's STAR Market opened lower, by the midday break four companies managed to post gains, led by Espressif Systems (Shanghai) Co., a
maker of wireless communication chips, which jumped 15.1 per cent.
China Railway Signal - Communication Corp posted the sharpest decline of
the morning session, falling 16.1 per cent by the midday break, having earlier fallen nearly 22 per cent
The company's shares remain 76 per cent higher than their initial public offer price.
Yuan Yuwei, fund manager at Olympus Hedge Fund
Investments Co, said that STAR Market valuations could remain frothy in the short term, but that he expected to see declines over the next
On Monday, stocks posted average gains of 140 per cent.
"This is a serious bubble," he said
"Valuations don't support fundamentals
Frothy valuations benefit big shareholders but retail investors will be burnt."
Yuan said he hoped regulators would not overly interfere
with trading and let market forces play their role.
The STAR Market's debut on Monday saw some shares climb as much as 520 per cent, and
more than doubled the board's combined market capitalisation, exceeding even the expectations of veteran traders.
Data from the Shanghai
Stock Exchange showed margin loans turbocharged trading on Monday, with investors borrowing a total of 1.51 billion yuan ($219.38 million)
to boost their buying power.
