Crypto Stock Fever Misses China as Investors Sour on Small CapsBloomberg News
Chinese stock investors don’t seem to share the global enthusiasm for companies jumping on the cryptocurrency bandwagon.
Shenzhen Forms Syntron Information Co. has fallen 22 percent since announcing in March an agreement to promote blockchain in Hong Kong and the banking industry. Easysight Supply Chain Management Co. has lost 18 percent since saying in April it will work with IBM to use blockchain. Compare that with the U.S., where companies making everything from juice to sports bras have seen their shares surge after announcing cryptocurrency ventures.
In China, the hottest stocks in the past year have mostly been large caps -- often with links to the government -- as investors steered clear of smaller companies since an equity bubble burst in 2015. The authorities have also made their disapproval of cryptocurrencies known, outlawing initial coin offerings in September and calling on local exchanges to halt virtual currency trading.
“Many listed firms’ development of blockchain technology is still premature so it’s unlikely to contribute meaningfully to earnings, ” said Wang Chen, Shanghai-based partner with XuFunds Investment Management Co. “While investors largely ignored small caps to pile into big caps last year, making it all the more difficult for blockchain stocks to deliver returns.”
— With assistance by Amanda Wang, and Amy Li