Manuel Moreno Capa (Director of GESTORES) | China already has its Nasdaq, its stock market for technology companies – the STAR index. Well, with certain differences: only 25 companies are listed on it, compared to the 3,000 listed on the Nasdaq. But it does not matter. The wind from the East blows hard and will drive technology funds, high risk products, but also with elevated potential returns in the medium and long term.
The STAR index began trading on the Shanghai stock market on 22 July. And it debuted with a spectacular 140% rise. One of the 25 companies listed on it, Anji Microelectronicos (producer of semiconductor materials), at one point rose 520% in value, finally ending with a 400% rise.
At almost the same time, the big US technology companies were pressuring Donald Trump to let them supply semiconductors and other components to Huawei. Trump´s moves to limit the sale of components to Huawei provoked serious upheavals not only in major Chinese technology companies, but also in US ones. More evidence that the last thing this sector, in itself very volatile, needs is a visionary and populist political leaders who want to use tariffs and new borders to fragment this global market, which constitutes the natural environment for technology companies.
The initiative of the Beijing Government to replicate, even in miniature, the US Nasdaq is one of the measures to prevent the Trump administration further damaging the big Chinese technology companies. Just as the US has sort self-sufficiency in oil in recent years, thanks to the development of new extractive techniques, China now seeks a technological self-sufficiency, so that giants like Huawei no longer depend on foreign suppliers.
It is trued that other major Chinese technology companies already list on the Nasdaq, where they have access to more liquidity than in local markets ( inter alia because Chinese investors face strict limits when buying foreign shares). But nothing will prevent them listing, sooner or later, on the new STAR index. A market which will attract ever more money form the major international funds specialising in Asian technology companies. They do not lose sight of these products: like all those related with the stock market and, especially, with technology shares, they are high risk. But they can highly recommended for well diversified fund portfolios which want to incorporate products with medium and long term potential.