Huge gains on ChiNext under new IPO system

Chinese stock markets closed higher on Monday, boosted by staggering gains of the first batch of firms listed on the Nasdaq-style ChiNext board under its revised IPO system.

Dragged by heavyweights such as financials and trade companies, the benchmark Shanghai Composite Index edged up 0.15 percent to close at 3,385.64.

The smaller Shenzhen Component Index rose 1.40 percent to finish at around 13,666.69, while the ChiNext Index jumped 1.98 percent to end its trading day at 2,684.63.

Combined turnover on the two major bourses came to 897 billion yuan (US$129.7 billion), with over a quarter of that contributed by the ChiNext Index board.

Under the new listing system, stocks on the tech-heavy board will be allowed to trade freely in the first five days from their debut. Following that, stocks are allowed to gain or lose up to 20 percent in a session, as compared with 10 percent previously.

Eighteen new high-tech firms made their debut and notched big gains. Contec Medical Systems Co Ltd, which focuses on research, manufacture and distribution of medical instruments, saw its shares jump more than tenfolds on the day.

Shares of Ningbo KBE Electrical Technology surged more than 740 percent.

“Promoting the reform of the Growth Enterprise Market and piloting the registration system is an important decision-making arrangement made by the CPC Central Committee and the State Council,” said Vice Premier Liu He at the listing ceremony.

Liu added: “It is hoped that the GEM will better serve the growth-oriented innovative and entrepreneurial enterprises, help build a multi-level capital market system, increase market tolerance and coverage, and support more high-quality companies to get listed.”

Kang Shuiyue, chairman and chief investment officer of Danyang Investment, said in an interview with Caixin that GEM stock companies, including those newly listed, have strong fundamentals and are expected to lead the market to continue its upward momentum.