China’s blockchain fever gets hotter even as regulator queries price surge
SHANGHAI (Reuters) – China’s blockchain-related companies extended their bullish run on Friday, as punters brushed aside concerns raised by regulators about the rationality of stock price surges this week.
Blockchain mania continued to propel the shares of a dozen companies which recently disclosed their involvement in cryptocurrency technology, even though some admitted their investments in the technology were still at an early stage.
A growing number of Chinese firms – ranging from packaging firms to gaming companies – have publicly linked their businesses with blockchain to capitalise on rapidly growing investor interest globally for the technology, the backbone of bitcoin and other digital currencies.
Chinese regulators are taking unprecedented steps to contain financial risks – Beijing has banned initial coin offerings, shut down local cryptocurrency trading exchanges and limited bitcoin mining – but speculators are not deterred.
Shares of Cashway Technology Co Ltd soared for the second day on Friday, even after it clarified that it had merely hired two young graduates majoring in encryption algorithm.
Client Service International Inc jumped the maximum 10 percent for the third straight day, although the software maker flagged risks to investors, saying it was still “exploring” blockchain technology.
Stock punters also pushed up other blockchain concept stocks such as Xiamen Anne, Brilliance Technology and Shenzhen Zqgame.
Most of these companies had seen their shares steadily falling since mid-2015 to multi-year lows before this week’s blockchain-triggered spurt.
“It takes only five minutes to think of an idea that has something to do with blockchain. But it’s a totally different story to build a business model around it that makes money,” said retail investor Wu Beicheng, adding he identified only one China-listed company, Hundsun Technologies, as a reasonable bet.
Highlighting how some companies are tapping into the speculative interest, the Shanghai Stock Exchange questioned Shanghai U9 Game Co on Thursday, asking whether it used the blockchain concept to help push up its flagging share price.
The company has a large proportion of shares pledged for loans.
Robin Zhang, compliance manager at asset manager Soochow Securities CSSD (Singapore), put China’s blockchain mania in the backdrop of a global setting, where companies including Eastman Kodak have attracted investor fever due to their applications of the technology.
“It’s a bit like the dot.com bubble. But after the bubble burst, some companies with real customers, revenues and performance, will stand out, like Google or Alibaba.”
(Reporting by Samuel Shen and John Ruwitch; Editing by Jacqueline Wong)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)