Wednesday, October 30, 2013
ChiNext Board Shows Signs Of Faltering Uptrend
HONG KONG (NQN)--The Shenzhen Stock Exchange's ChiNext Board for start-ups is showing signs of change. The ChiNext Index has risen 140% from the end of last year, and marked a record high on Oct. 9, mostly thanks to small- and mid-cap issues that have yet to find hard ceilings. But in the past few weeks it has come under selling pressure from investors locking in gains.
The ChiNext Board market opened in 2009, and lists about 350 companies. Many are start-up firms that have unique strengths, such as 3-D printing or software-related technologies.
The index is currently about 10% below its Oct. 9 peak. On Oct. 16 alone, the index fell about 4%.
Stocks that come under selling pressure after sudden surges draw market attention, and once selling pressure gains momentum, it is difficult to stop. This is in part due to lingering market fears of too much enthusiasm creating bubbles.
The majority of participants on the Chinese stock market are retail investors, and they mainly invest in small- and mid-cap issues. An analyst at Aizawa Securities Investment Research Center in Shanghai said that declines on the ChiNext Board market dampen overall investor sentiment.
The Chinese economy is expected to achieve the 7.5% growth rate target set by the government for this year, and the government will highly likely reduce measures for supporting the economy. Because such government moves will inevitably influence small and midsize companies, unstable moves are predicted on the ChiNext Board market.
--Translated from an article by Nikkei Quick News staff writer Hisatsugu Nagao
(The Nikkei, Oct. 30 evening edition)