2009-10-31

China's GEM market launched

ChiNext's Dazzling Debut
The average p/e for the 28 companies (diluted) is 55.7 times. Shanghai Bestway's p/e is 40 times, the lowest, while Dinghan Technology's is the highest at 82.2 times. The average P/E of 24 small and medium-sized enterprises listed on the Shenzhen Market this year is 37.68 times. Analysts believe that the high issuing P/E ratio of some companies has overdrawn the performance for the next one to two years, or even three years.

In order to prevent heavy first day speculation, the Shenzhen Exchange stipulates that if transaction prices rise or fall over 20%, trading in the stock will be temporarily suspended for 30 minutes; more than 50% fluctuation would lead to 30 minutes more trading suspension. Once prices fluctuate more than 80% , the Exchange will suspend trading the stock until 14:57, that is, three minutes before the end of the trading day.

As of the closing at noon Friday, 16 stocks had been "stir-fried" (heavily speculated) after trading resumed and suspended for the second time. Five stocks rose by more than 200%, and the rest rose by over 100%. The prices of three stocks, Ultr@power, Chase Sun, and Siasun, are over one hundred yuan, and the price of Geeya is the lowest at 35 yuan, still an increased by 211.95%.

As the marekt closed, the trading of all of 28 stocks more than doubled, ranging from 120% to 226% compared with their IPO prices.
If the Keynesians believe animal spirits are the problem with the economy, then China clearly has no problem. On the other hand, it does look a tad bubbly.

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