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SMIC shares soar in Shanghai, in a successful debut that may give more Chinese stocks confidence to leave US market

  • SMIC shares opened at 95 yuan, compared with its IPO price of 27.46 yuan
  • Stock surge follows a week of buying euphoria in the broader market

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Business executives, stock exchange officials, representatives from investment funds, and officials from the Chinese semiconductor industry association gather at the trading floor of the Shanghai Stock Exchange for SMIC’s stock debut on July 16, 2020. Photo: SMIC
Daniel Ren
Semiconductor Manufacturing International Corporation (SMIC), China’s biggest chip maker, surged on its stock debut, 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.
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The chip maker’s shares surged as much as 246 per cent to 95 yuan when they began trading in Shanghai, versus its initial public offering (IPO) price of 27.46 yuan. They closed at 82.92 yuan on the Star Market, a technology board that allows unlimited two-way price swings on the first five trading days.

The rally gave SMIC a market capitalisation of 590 billion yuan (US$84.3 billion) on a day when the broader equity markets slumped. The Shanghai Composite Index plunged 4.5 per cent on Thursday, the most in five months. SMIC’s shares listed in Hong Kong crashed 25 per cent to HK$28.75.
Before Thursday, the gauge reached the highest level in 17 months in its 10 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 market upswing was given a tacit approval earlier this month when China Securities Journal said the A-share markets had 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.

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