Reports have come in that China is yet again trying to boost its very volatile stock market. On Monday, according to CNBC, China introduced its own version of the Nasdaq tech board-the Science and Technology Innovation Board, otherwise known as the "STAR Market."
The board has 25 companies listed on it as the country wants to address concerns like volatility in the market as well as weak governance.
China is home to the world's second-largest equity market, only below the US in that matter.
Foreign capital is expected to flow right into Chinese stocks with their inclusion in major indexes in the region. Recently, retail participation has also been high, which led to speculative trading that made people look at China's stock markets more like a casino than a trading board.
It doesn't help that the past few months have been marked with executives being arrested and the disappearance of billions of dollars.
The government had been active in cracking down on the guilty parties. This didn't stop from analysts citing the relative lack of governance as the reason why these major publicly-listed companies managed to operate under the radar.
The tech board opened successfully, a tribute to the Chinese's dedication to clean, honest trading. At the tech board's opening, the market went in a frenzy of buying by investors. CNN reported that share prices soared impressively.
Trading on this new board started on Monday, less than a year after Chinese President Xi Jinping revealed this initiative to the public. Upon opening, 25 stocks listed on the board of the "Start" gained 160% on average. Anji Microelectronics Technology led the way with shares climbing to a whopping 520% before it leveled out just a bit.
The money pouring into the newly opened board market continued as several new billionaires were suddenly created, with the founders of Suzhou HYC Technology and Zhejian Hanke Technology being some of the recipients.
Ronald Wan, chief executive of Partners Capital International in Hong Kong, said that the surge was "crazy." Trying to prevent being overwhelmed, he did say that it was "overdone" and that the gains made during the opening day wouldn't possibly last as they are. They were still "speculative."
This marked the third time in a decade that China created a new major equity market. In 2013, the New Third Board started operations, while the ChiNext opened in 2009.
