What's going on?

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.

Why should I care?

For markets: Everybody likes freedom.

Stringent stock market rules at home have historically driven China�s big tech companies � including internet giants Alibaba and Tencent � to raise money overseas. Relaxing restrictions should allow more startups to raise money locally ��but with strict controls on Chinese investor money remaining in place, the jury�s out as to whether the tech titans will come home anytime soon.

For you personally: Digging a hole to China.

China is now on par with the US in terms of the size of its biggest businesses; it�s no surprise that you may want to buy into some of the country�s best and brightest. The Star Market, alas, is only open to a few �qualified investors� from abroad. But with previous Chinese attempts to create a tech-friendly stock market ending in tears, things might change…