China's NASDAQ-like bourse, ChiNext, was off to a flying start in Shenzhen on Friday. So high was the investors' response that trading in the shares of all the 28 companies had to be halted for 30 minutes at least once after they rose 20 percent over their opening prices, setting off circuit breakers and underscoring massive speculation in the nascent market for start-ups.


Cable TV equipment maker Chengdu Geeya Technology Co's shares were suspended from trading thrice after they jumped more than 80 percent.
 
Tianjin Chase Sun Pharmaceutical Co and Beijing Ultrapower Software Co were the most expensive stocks on the first day of trading. Both crossed the 100-yuan ($16) mark, with Tianjin Chase closing at 106.5 yuan and Beijing Ultrapower at 102.9 yuan against their IPO prices of 60 yuan and 58 yuan. Based on their closing prices, ChiNext companies are trading around 100 times their price-to-earnings ratio.
 
The long-awaited ChiNext is expected to give small- and medium-sized enterprises access to funds and encourage private equity companies and venture capitalists to back start-ups, with regulators hoping it would help the growth of companies with high potential, especially young ones.
 
The Shenzhen Stock Exchange has adopted regulations to curb excessive speculation, which say trading in newly listed shares will be suspended for 30 minutes if their values rise or fall 20 percent from their opening prices, and for another 30 minutes if they move 50 percent either way.
 
And if a company's share moves 80 percent either way from its opening price, it will be suspended from trading until the final 3 minutes of the session. Though the shares rose sharply on the opening day, some analysts said next week's trading is very likely to see a correction.
 
"The average price-to-earnings ratio of the 28 companies' shares was more than 56 times during their IPOs, already too expensive to deserve purchasing when they started trading on ChiNext," said Ian Midgley, chief executive of Aries Investment Management (Shanghai), who was discouraged from trading in the high-risk stocks. Midgley, who manages a private fund investing in the A-share market, said he did not buy any of the 28 stocks because it was not an investment based on true value.
 
"I'm not surprised to see excessive speculation. The same thing happened to Hong Kong's GEM (Growth Enterprise Market) before," said Ben Kwong, head of research at brokerage house KGI Asia. "The new board is catering upstart companies with a new business concept, which is prone to attract many investors, but the market will cool down after some time," Kwong said. Earlier, speaking about ChiNext's launch, Shang Fulin, chairman of China Securities Regulatory Commission, said risk-control should be a priority in the new market.
 
The sharp rise in prices made it hard for small investors, who had bought new shares of the 28 companies at their IPOs, to hold on to them any longer.
 
"I sold my shares very early. I should have waited a little longer," said a Beijing-based investor, surnamed Zhou, who got an allotment of Dayu Water Saving Co's shares at 14 yuan each and sold them at 25 yuan soon after trading started. But not all investors are keen to jump into the ChiNext market despite the bourse taking off on a dazzling note.
 

"The prices are outrageously high now and there is a strong speculative sentiment in the market. I'll wait and see how it develops," said Chen Xiangxing, a Beijing-based investor.