What’s Going On Here?

China launched its answer to America’s NASDAQ stock exchange on Monday – and manic investor demand saw the 25 newly listed stocks on the “Star Market” shoot up 140%.

What Does This Mean?

The Star Market’s designed to compete with big tech’s current favorite home – and perhaps lure back some of the Chinese companies currently listing shares overseas. Properly known as the Science and Technology Innovation Board, the Star Market is a group of companies nominally listed on China’s main Shanghai Stock Exchange – but with significantly more relaxed rules.

For one, loss-making Chinese companies will now be allowed to list shares (in the US, 81% of stock market debutants last year were unprofitable). There’s also no limit on Star Market firms’ valuations, or their share price movements in the first week of trading. Dual-class share structures popular among tech companies – which give founders more power than other investors – are permitted. And, for the first time in China, betting against Star stocks is allowed.