China's Nasdaq-style GEM starts trading

Trading has started on China's Growth Enterprises Market.  The listing ceremony for the Nasdaq-style board was held in the southern city of Shenzhen.  And as CCTV reporter tells us, all stocks surged on their debut.

China's Nasdaq-style market went into operation with 28 listed companies. Stocks for all surged, and trading was temporarily suspended for some that hit the 20 percent limit.

Delegates of the first batch of 28 selected firms for China's ChiNext pose  for photos during the listing ceremony in Shenzhen, south China's Guangdong  Province, Oct. 30, 2009. China's Nasdaq-style market, ChiNext, made their  debut Friday on the Shenzhen-based exchange.(Xinhua/Peng Yong)

Companies see the GEM board as a new channel to raise capital.

Company Representative said "I hope that our stocks don't rise too much at first, and keep stable growth in the future, ensuring investors a good return."

Song Liping, General Manager of Shenzhen Stock Exchange said "The launch of the GEM board further improves the multi-layer market mechanism for the Shenzhen Stock Exchange.  For our country, it enables large number of qualified companies to list in the domestic market."

More than 9.3 million investors have opened accounts on the GEM board.  The industry regulator has said it will strictly control abnormal price fluctuations on opening day.

The batch of 28 companies has an average price earning ratio of 56.7, much higher than in the A-share market.

Only time will determine whether the P/E ratio is reasonable.

The regulator also says the GEM board is not a copy of the small to medium enterprises plate, as most of its companies are from hi-tech sectors.