30% Rise in Some Chinese Stocks as Investors Bet on New Beijing Exchange Opening

Following an announcement from the Chinese President, there will be a launch of a new stock exchange in Beijing. This initiative is to help generate capital for the small businesses in Beijing. On Monday we see a rise in the 66 “select” stocks. One third of the stocks rise to about 30%. 

More than 60 small traded Chinese stocks rose by at least 10% as the investors placed their bets on the presumed inclusion in the new Beijing stock exchange as reported by the president. It is reported that small and privately run businesses provide more than 80% of the available jobs in the country. However these businesses go through more hard times than government owned businesses. 

Select Stocks

On Friday, securities regulators mentioned that the new Beijing Stock Exchange will be drawn from the over the counter “select” section of the “New Third Board ”. This resulted in the surge in about 66 select stocks. However, only five of the companies have market capitalisation of more than $1 billion. 

Speed bird, manufacturer of metal sheets and Zhulaoliu were part of the 10 advancers. There is no announcement on the date of the launch as of now and the authorities are taking comments from the public on rules for the new trading venue through September 22.

Another Stock Market

This new plan marks another attempt by the Chinese government to allow the local stock market to serve as a financing channel for companies. As a result of the dominant investors driven by sentiments there has been immense contribution of speculative activity to the mainland stock market. 

China’s largest companies like Alibaba and others have listed under New York and Hong Kong because of how passive the IPO system operates. This summer a tighter scrutiny on Chinese listings in the US have halted the flow of the IPOs to New York. To test a faster registration-based IPO process, China launched the Star board in 2019. Despite this, analysts confirm that the stick board lost momentum with the IPO delays last year.

However, there has been an expansion of some of the practices on Starboard. They are hopeful that this new report would add to these improvements in the market. Nanhua Futures director, Cai Yanhui mentioned that the establishment of the Beijing exchange shows changes to the financial market are going at a fast pace and the system may be now close at hand.