Crazy Trading on China's Nasdaq Has Its Own Logic
In a market with no FANGs, it makes sense to chase the next big thing.
You’re not going to find China’s future FANGs in a liquor factory.
Photographer: Kevin Frayer/Getty Images
Old habits die hard. China’s Nasdaq-like ChiNext board has staged a comeback this year, rallying 17% to trade at an average of — yes, really — 70 times earnings. Is this misguided enthusiasm by an investor base that infamously engineered a stomach-churning crash just five years ago?
All the conventional wisdom points to irrationality. The ChiNext is composed mostly of young, small and volatile enterprises, whereas blue chips are far better placed to weather the coronavirus outbreak. First-quarter earnings reports from China’s domestically listed companies just drove home the point.