(Yicai Global) March 25 -- About 30 startups will be the first to go public on Shanghai's forthcoming science and technology innovation board and will have a combined market capitalization of CNY178 billion (USD26.6 billion), according to one of China's leading brokerages.
The board is also expected to have daily turnover of CNY18 billion, which breaks down to CNY600 million per listed company, state-backed news outlet The Paper reported, citing a new research report from Citic Securities.
The Shanghai Stock Exchange stipulates that each trader on the new market must have at least CNY500,000 (USD74,477) on account in each of the 20 days before authorization. Accounts with between CNY500,000 and CNY1 million own more than CNY654.5 billion worth of stocks, according to CITIC. Prices of shares newly listed on the sci-tech board will likely push higher because of a supply and demand imbalance.
The board will have no daily limits for the first five trading days, which spells volatility from day one, according to the report. The hot money is likely to enter the market on the fifth trading day rather than in the first four.
Shares may be subject to speculation at the outset, the report said, adding that whether a stock falls on its debut depends on its issue price rather than short-term market heat. If most new shares fall on their first day, the expectation on new shares will snap and new players will need to adjust their prices dynamically.
The premise of these predictions is that the market remains overheated, the report said. If the market cools, the problems of high issue pricing and debut stumbles will be greatly alleviated, it added.
Editor: Emmi Laine