SMIC Shares Soar in Shanghai, in a Successful Debut
Semiconductor Manufacturing International Corporation (SMIC), China’s biggest chip maker, surged on its stock debut, more than tripling its value in the midst of a state-endorsed bull market while setting a successful bookend to its exodus from the New York Stock Exchange.
The chip maker’s shares surged 246 per cent to 95 yuan when they began trading on Shanghai’s technology board known as the Star Market, versus its initial public offering price of 27.46 yuan. The stock traded 220 per cent higher at 87.98 yuan at the 11.30am trading break. That is also triple the price of its stock in Hong Kong, which slipped 17 per cent to HK$31.90.
The Shanghai Composite Index reached the highest level since early 2018 in its 9 per cent charge this year that added some US$1 trillion to the market capitalisation. The run-up brought its rally to 35 per cent from the lowest point in 2019 amid ample liquidity and an influx of foreign funds and new retail investors afraid of missing out on the party.
The upswing was given a tacit approval earlier this month when China Securities Journal said the A-share markets possess the criteria and foundation for a healthy gain. The rally was needed to foster economic recovery, attract foreign investment and compete with other markets, the journal added.
Dozens of company executives, investors and industry consortium leaders were invited to the listing ceremony at the Shanghai exchange on Thursday morning, sitting on chairs that were sparsely lined up at the trading floor.
SMIC announced a surprise plan a year ago to delist from the US market amid heightened global technology war, a spillover from two years of acrimonious US-China trade war. President Donald Trump has ordered US technology companies to stop supplying their hardware, software and services to Chinese companies on national security grounds.
“Semiconductor companies are the darling of Chinese investors nowadays as tension between the US and China escalated,” said Ivan Li, a money manager at Shanghai-based Loyal Wealth Management. “The battle in the technology field, particularly in chip-making, has largely fuelled Chinese investors’ enthusiasm in home-grown manufacturers.”
Neha writes articles on sectors including medicine, food, materials, and science & technology. A qualified statistician, she has the ability to observe and analyze the trends in global markets and write compelling articles that help CXOs in decision making. She is a bookworm and loves to read fiction, lifestyle, science and technology. Neha comes with 6 years of experience in content writing and editing that involves blog writing, preparation of study materials and OERs.