Flood of IPOs to Test Resilience of China’s Sizzling Tech Board

CHINA-STOCKS

Source: AFP via Getty Images

A flood of new offerings will test investor demand for the already pricey ChiNext board on Monday, when the index begins trading under revamped rules that removes daily price limits for debut shares.

At least 18 firms, ranging from electronic product manufacturers to medical instrument makers will trade for the first time under so-called registration-based initial public offerings. The companies raised a combined of 20 billion yuan ($2.9 billion) from their ChiNext listings, with retail demand outstripping supply by an average of around 5,700 times, according to data compiled by Bloomberg.

The reforms are a landmark in China’s efforts to liberalize its capital markets and Beijing will want a smooth implementation of changes to the $1.3 trillion ChiNext board. Yet demand for new shares may suck funds from existing equities which are looking expensive after the index surged almost 50% this year. New share sales won’t be subject to price caps in the first five trading days, while daily limits on existing stocks will double to 20%.

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