While biotech and some other stocks on the mainland’s bourses have skyrocketed after the news about the new epidemic that is spreading across China, other publicly traded companies are witnessing investors' pessimism. The CSI 300 index nosedived by 128.03 points (-3.10%) on January 23 as Wuhan – the city that is widely deemed to be the cradle of the deadly 2019-nCoV – was put on lockdown before the trading day started.
Followers of tech stocks, as we are, have been predictably curious about whether the ‘Chinese Nasdaq’ (here’s a fresh report on it, by the way) would face a similar trend these days. And yes, to a certain extent, it has done. The market capitalization of 70 companies that went public last year in the new venue dropped by 3.2%.
Adding an extra 36.87% (or a still impressive 27.39% if we don’t consider new listings) in just three weeks of 2020, the Star board has been confidently outperforming the rest of the country’s public equity marketplaces.
In addition, as we found in the aforementioned report, the correlation between trading patterns on the experimental platform and the mainboards of both the Shanghai and Shenzhen exchanges is utterly weak. This might have something to do with the prevalence of institutional investors on the Star Market.
However, this time the two went down at once. Theoretically speaking, this is something called ‘systematic risk.’ External, macro events bring multiple uncertainties that can cluster together, emerging into strong economic and social trends that are often mirrored in the state of open trading on the local platforms.
As usual, there were some exceptions. One example is Transsion, a Shenzhen-based smartphone maker. Its stock grew by 4.42%, boosting the firm’s market cap to CNY 58.4 billion (USD 8.43 billion) at the end of the day. Another case is lithography equipment producer KINGSEMI (its December IPO was also covered by EqualOcean) that has reached a new peak, trading at CNY 127.50 (USD 18.40) apiece – the stock jumped up by 7.34%.