400% Gain for China
While US markets quietly traded, yesterday was sheer pandemonium for the Chinese. A free-for-all on the country’s brand new ‘Star’ exchange saw 24 tech stocks go public all at once, resulting in jaw-dropping gains for speculators! We’d better take a stock check.
When the worst-performing stock ends the day up 80%, you know something’s up. Not only did the ‘Star Market’ exchange as a whole make its long-anticipated debut, but so did 24 of the 25 stocks listed on it. The result? A scene of absolute bedlam as Chinese speculators rushed into whatever was hottest, and remember, this was only day one!
To the surprise of many, the government was cool with this. The Star Market is China’s uncharacteristic bid to lure back Tencent (#10cent) and Alibaba (#baba) from American exchanges, and probably send a message to Washington, too. Companies of all creeds were allowed to raise funding, so letting free-market principles do the work, Xi just sat back as a host of unprofitable tech prospects were released out of the gates, gains uncapped. The best performer made an eye-popping 520%! Although, it did fall back to a modest 400% by the close.
So, what next? CEO of Partners Capital International, Ron Wan, is skeptical of the bulls in this China shop picking up where they left off. Calling the day’s events “crazy,” Wan thinks “it’s already overdone” and that “such gains can’t last long.” Eventually, prices should revert to value, but bags of money could be made or lost before then.
Day two has already commenced in the East, and Ron Wan is being proved right. The market’s taking a dive in different kind of frenzy, so it promises to be a long, windy road for the Star Market from here on in!