HONG KONG -- With China opening its doors again to initial public offerings, investors are eyeing the smaller issues listed in Shenzhen, leaving behind a limp Shanghai market.
The Shanghai Stock Exchange Composite Index extended its advance slightly Tuesday. Traders largely took a wait-and-see stance ahead of the release Wednesday of economic indicators for June, but buying prevailed to some extent in the afternoon. Trading value came to 81.5 billion yuan ($13.1 billion).
The market lacks momentum, still stuck below its level from the beginning of the year. Daily trading value is in the 80 billion yuan to 90 billion yuan range, less than the boom-or-bust mark of 100 billion yuan.
Meanwhile, the Shenzhen Stock Exchange Composite Index is positive for the year so far and now stands at its highest point in four-and-a-half months. Its daily trading value beats the Shanghai bourse's on a daily basis at 120 billion yuan to 130 billion yuan. The center of China's stock market seems to be shifting southward.
The Shanghai market includes a number of major state-owned enterprises. These more readily feel the impact of President Xi Jinping's reform drive, so investors tend to keep their distance. In contrast, the Shenzhen market focuses on small and midsize private-sector companies.
China reopened its IPO market late last month after a four-month break, and the nine companies that have debuted since then have all surpassed their offering prices by hefty margins. Investors have turned their attention to smaller issues, including the healthy IPO market, and thus to Shenzhen.
Shanghai stocks are starting to be seen as a bargain, with some predicting that the market could rise 20% by the end of the year. But with the boom in China having passed, the amount of money flowing into stock investment there will be limited.
There are still 40-50 new listings lined up for this year. As long as their popularity keeps traders focused on smaller companies, it will be some time before the spotlight returns to Shanghai.