Following the adoption of new rules intended to make it easier for companies to hold initial public offerings (IPOs), some Chinese technology companies newly listed on the ChiNext exchange board of the Shenzhen Stock Exchange soared on their first day of trading, CNN Business reported.
Among them was a medical technology company called Contec Medical Systems that saw its price increase 10-fold during the trading day, CNN Business reported.
The ChiNext board is geared toward technology companies and is attractive to small- to medium-sized businesses (SMBs).
“The ChiNext reform is a significant part of China’s grand competition strategy with the United States,” Hao Hong, head of research at BOCOM International, wrote in comments quoted by Reuters. He went on to describe ChiNext as “a venue for speculation and said "falling stock prices, instead of rising, should be the sign of whether such market reform is successful.”
Reuters presented the changes to ChiNext rules — stocks also will be allowed to swing twice as broadly during any given trading session — as a sign of China's enthusiasm to challenge the U.S. technology sector.
"We hope the ChiNext board will better serve growing innovative and entrepreneurial enterprises," China Vice Premier Liu He said in a statement quoted by CNN Business. "We hope it will support more quality companies to list on the domestic stock market."
Changes on ChiNext and others in the country have come amid calls in the U.S. for greater scrutiny of Chinese companies seeking to trade on U.S. exchanges, specifically their financial audits.
“Becoming a public company will enhance transparency to our stakeholders, including customers, business partners, employees, shareholders and regulators,” Ant Group Executive Chairman Eric Jing said previously.