China's new tech trading board is about to have its busiest day yet

Beijing

THE early clamour for listings on China's new technology board intensifies this week as subscriptions for nine companies open Wednesday, testing investor appetite for stocks.

That's the highest number for a single day in China since June 2015, as regulators speed up initial public offerings (IPOs) on the Nasdaq-style venue, which the government hopes will attract some of the country's best companies. The first batch of 25 firms will begin trading on July 22, just eight months after President Xi Jinping first announced the project.

"The pace of issuance and the timetable of trading debuts on the tech board are faster than the market expected," said Jiang Liangqing, a money manager at Ruisen Capital Management in Beijing. "Investor enthusiasm seems very strong for these new shares, but if the stock market keeps falling, investors will likely price in some negative sentiment on them."

The Shanghai Composite Index was the worst-performing major equity gauge in the Asia-Pacific region on Monday, falling the most in two months after the exchange gave fresh details on the new tech board late Friday. The coming rush of IPOs has raised concern that liquidity will be drained from other parts of the stock market, said Ken Chen, an analyst at KGI Securities Co. The tech-heavy ChiNext slid 2.7 per cent Monday, its biggest loss since May 17.

Only five of the companies have opened for subscriptions so far, including Montage Technology Co on Monday, leaving two weeks for the remaining 20. Based on their latest filings, the nine entering the fray Wednesday aim to raise a combined 18.8 billion yuan (S$3.7 billion). Among them, China Railway Signal & Communication Corp plans to raise about 10.5 billion yuan, which would be the biggest listing of the year in China.

Several tech stocks rose Tuesday, boosted by high offering prices and strong sentiment ahead of the new board's debut. Zhuhai Hokai Medical Instruments Co, which makes similar products to listing candidate Micro-Tech (Nanjing) Co, rose by 9.9 per cent in Shenzhen. NanJing Sanchao Advanced Materials Co, Union Optech Co, Henan Splendor Science & Technology Co and Changsha DIALINE New Material Sci & Tech Co all advanced by the 10 per cent daily limit.

Tianfeng Securities Co expects the liquidity impact of the subscription process to be limited. The real test will come after the stocks start trading. The 25 companies are expected to account for around 7 per cent of daily volume of the whole A-share market at first, a pattern that may last for five days as there's no daily limit to price moves in that period, analysts wrote in a note dated Sunday. Other indexes have restrictions on stock moves.

The eight other companies lined up for Wednesday are Ningbo Ronbay New Energy Technology Co, Appotronics Corp, Fujian Forecam Optics Co, Harbin Xinguang Optic-Electronics Technology Co, Advanced Micro-Fabrication Equipment Inc, Espressif Systems (Shanghai) Co, Anji Microelectronics Technology (Shanghai) Co and Xi'an Bright Laser Technologies Co. BLOOMBERG