The Chinese Nasdaq

Shanghai’s new Star Market saw some companies soar on its first day – and its only just the beginning for Chinese equities on the global stage

Andrew Willis 2 August, 2019 | 1:50AM
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China’s first tech stock exchange – known as the ‘China Nasdaq’, started trading last Monday.

Shanghai’s Star Market started with 25 stocks, with 100 on the waiting list. To give you an idea of how ‘new’ this market is, 24 of those first 25 stocks were also celebrating their IPOs.

And one of those stocks, Anji Microelectronics Technology, soared 400%. Which gives you an idea of the investment opportunities as these Chinese equities enter the global market.

We see the trend continuing at Morningstar this year and believe the proportion of Chinese shares on the MSCI Emerging Market Index will grow more than four-fold year-over-year by November.

We’re already seeing ETFs invest in these companies and think the integration of Chinese and Global capital markets has only just begun, with word of an ETF coming soon that will track this new market.

It’s an exciting time for tech investors, especially those that see the potential of a well-funded Chinese tech sector that’s already tapped into a multi-trillion-dollar e-commerce market.

At the same time, with great opportunity comes great risk. And the Chinese government itself is warning against making any overly-speculative bets.

We agree, but also note the toll the trade war has already had on Chinese tech stocks – and that at least this particular risk factor, may already be priced in.

For Morningstar, I'm Andrew Willis.

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About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar Canada. He previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @Andrew_M_Willis.

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