Investors Cautious on ChiNext

On the floor of a stock exchange in western Beijing, some retail investors say they will wait for the cat to jump before buying shares of listed companies.

"I will wait and see first. The issue price is too high. I don't want to take the risk."
"Right now I don't have enough information about the listed companies on the new board, so it's hard for me to make the right investment decisions."

Although ChiNext has also attracted wide global attention, the country's qualified foreign institutional investors, or QFII, funds have not shown much enthusiasm for its listed companies. At present, only two QFII funds are taking part in share subscriptions.

Hu Zuliu is Chairman of Goldman Sachs in China.

"Most QFII investors so far haven't made any plans to invest in the board. After all, it's a brand-new stock market in China."

He says before making investments, QFII investors want to know how the growth companies plan to use the funds they raise and whether they have sustained profitability.

Despite the uncertainties of the new stock market, financial industry insiders believe China's structural adjustments to the economy will provide more development opportunities for ChiNext.
The first group of 28 growth companies listed on the board range from software to medical equipment makers.

Chen Xingdong, Chief China Economist at BNP Paribas Securities Asia, says investors will pay attention to companies from new emerging industries.

"According to our analysis, companies featuring energy-saving and emissions reduction technologies are promising. Medicine and health care-related industries as well as green agriculture will also gain popularity."

Jim Rogers, a respected international investor, has invested large sums in China's stock market. He says he is optimistic about ChinNext, although he is waiting for the right time to buy shares.

"I know there are going to be companies like Microsoft, like Disney, like Toyota in your small company market. Now if you are going to be a successful investor, you should invest for the long run unless you are a very good short-term trader. Very, very few people are good short-term traders. Do a lot of research, find the right companies, buy them and stay with them for a few decades, and some day you will have huge amounts of money."

Now it seems too early to predict whether ChiNext will be another Nasdaq. But as most insiders and investors say, it will require caution and patience to find the answer.

Chen Zhe, CRI News.