(Yicai Global) July 16 -- A big sell-off in shares of companies listed on the Star Market, the Shanghai Stock Exchange’s science and technology innovation board, is not expected when another lock-up period ends next month.

Some CNY241.7 billion (USD34.5 billion) worth will be eligible for sale in July, according to data from Shanghai Wind Information. Though that poses a threat, it is not expected to cause material harm because of new divestment rules, the likely entry of new capital and other positive factors, the China Securities Journal reported, citing market insiders and brokerage research notes.

Most of the selling pressure will fall on July 22, the first anniversary of the Nasdaq-like market. From that day, investors can sell 3.1 billion shares, worth CNY218.5 billion, of 25 firms. That’s 90 percent of the total freed up next month.

But the market may actually face relatively limited pressure from any selling, China International Capital Corp. said in a research note, adding that the end of the sales-ban period could impact risk appetite more than capital on the board.

The end of the lock-up term is most likely to resemble that of the Shenzhen Stock Exchange’s ChiNext board in November 2010, which did not severely impact the board, CICC said.

Little Sold

Only a small percentage of the CNY23.9 billion worth of shares in the first 28 firms that listed a year earlier on the ChiNext was actually sold. CNY23.9 billion represented 69 percent of their total market cap. Eventually, CNY597 million (USD85.3 million) of shares were sold in the month, a mere 2.5 percent.

The end of the lock-up did not significantly affect the performance of the ChiNext board around that time. The indexrose 4 percent on Nov. 1 and maintained an upward trend that before, during and after that month, gaining 17.5 percent in October and 6.3 percent in December.

Lifting of thenextlock-up period for Star Market equities may have a short-term impact,but both its strength and duration will be relatively limited, Guosheng Securities said in a note. In the long run, it may provide institutional investors with the opportunity to boost their stakes in Star Market firms by lowering the stock price, and is highly likely to launch a bull run on tech stocks in the next quarter.

There is a motivation to pare holdings in these firms, but it may not have a big influence on the market, according to Wang Jiyue, a senior investment banker. That is because participants have already priced it in, or else the share price would have already come down.

Editor: Peter Thomas