Caixin
Jul 23, 2019 08:07 PM
BUSINESS & TECH

Semiconductor Shares Dip on New Board After Explosive First Trading Day

Semiconductor stocks held their gains on Tuesday, a day after they were the best group of performers on the first day of trading for China's new Nasdaq-style high-tech board. Photo: IC Photo
Semiconductor stocks held their gains on Tuesday, a day after they were the best group of performers on the first day of trading for China's new Nasdaq-style high-tech board. Photo: IC Photo

After semiconductor shares posted massive gains on the new Nasdaq-style high-tech board’s first day of trading, the sector’s stocks edged down on the second day.

The board’s six semiconductor companies saw their combined market capitalization shrink 4.7 billion yuan ($680 million) on Tuesday. Four of them saw their share price fall, dropping between 1.05% to 12.7%.

Shares in semiconductor manufacturer Anji Microelectronics Technology fell 8.8%, but were still trading around 400% higher than their initial public offering (IPO) price. Shares in Raytron Technology Co. Ltd., which mainly engages in integrated circuit manufacturing, dropped 12.7%, trading around 140% higher than their IPO price at close.

The six firms all saw an increase of over 100% on their Monday debut on the so-called STAR Market. Anji Microelectronics performed best, rising as high as 520% in morning trade, before closing at around 400%.

The Tuesday fall in semiconductor stocks is roughly in line with the average performance of the 25 firms currently listed on the high-tech board, 21 of which dropped Tuesday after adding around 305 billion yuan to their total market capitalization on Monday.

“The price gains (of semiconductor companies) have been, surprisingly, much higher than expected,” said Sheng Linghai, research director at Gartner. He said that while these companies have some achievements, they lag behind world leaders in terms of their products and services.

Investors are betting on the future of the Chinese chip industry, as the country attempts to build up its own semiconductor design and manufacturing capabilities due to concerns over its dependence on imported chips. This has been given added urgency by the China-U.S. trade war, in particular Washington’s move to cut off the supply of critical components and services to Chinese telecom giant Huawei Technologies Co. Ltd. earlier this year.

The STAR Market has helped Chinese semiconductor companies tap into the vast wealth held by domestic investors, said Chen Zhibin, director of the integrated circuit fund at investment company Suzhou Oriza Holdings Co. Ltd.

Companies in the sector were previously more likely to get funds from a small community of investors close to the industry, Chen said, adding that STAR Market investors’ confidence in the sector will be significantly influenced by the quality of semiconductor companies that are listed on the board in future.

Contact reporter Tang Ziyi (ziyitang@caixin.com)

You've accessed an article available only to subscribers
VIEW OPTIONS
Share this article
Open WeChat and scan the QR code