Visitors gather at Enflame Technology's booth during a high-tech expo in Shanghai in July. CHINA DAILY


Support from the Chinese capital market for the development of emerging technologies has strengthened amid ongoing reforms nationwide, yet a new valuation framework and patient long-term capital are considered critical to sustaining the growth of new quality productive forces over the long haul.


Such comments by experts followed the highly anticipated IPO of Enflame Technology. The Shanghai-based artificial intelligence chipmaker released on Thursday the results of its STAR Market IPO subscription. Priced at 142.18 yuan ($21.18) per share, the offering is set to raise more than 6 billion yuan, which will go toward developing and commercializing its fifth- and sixth-generation AI chips.


The upcoming float of Enflame will see all four of China's major GPU players become publicly traded. The other three — Moore Threads, MetaX and Biren Technology — saw their prices surge over fourfold on debut trading day.


The STAR Market in Shanghai is the trading bourse for the three companies except Biren Technology, which is listed in Hong Kong.


Over the past eight months, a total of 17 companies raised over 97.5 billion yuan with STAR Market IPOs. Their combined IPO proceeds accounted for nearly 51.3 percent of the total A-share IPO value during the same period, which spiked 190 percent year-on-year to over 190 billion yuan.


To date, 64 pre-profit companies have listed on the STAR Market, including Enflame Technology.


Dong Zhongyun, chief economist of AVIC Securities, said the STAR Market's listing criteria perfectly match frontier sectors such as AI, commercial aviation, biomedicine and quantum information, which include long investment cycles, huge investments and front-end losses.


In general, a more inclusive, adaptive and globally aligned multilayered capital market is taking shape in China at an accelerated pace. It has become a pillar for the development of new quality productive forces, facilitating the change from old to new economic drivers, said Zhang Jun, chief economist of China Galaxy Securities.


But the logic for the valuation of technology assets is being reconstructed. The true tech leaders will command both a security premium and a growth premium. Those that are just riding the hype will see their valuations shrink and liquidity dry up, Zhang said.


Yang Chuan, a distinguished senior research fellow at the Shanghai Institution for Finance and Development, said the current biggest difficulty for the valuation of tech companies is the lack of a unified gauge. Different investors are measuring the same company with their respective standards. This may result in significant price deviations from the company's fundamentals and drastic price fluctuations, he said.


Zhu Ning, professor at the Shanghai Advanced Institute of Finance at Shanghai Jiao Tong University, warned that some investors are starting to take it for granted that hard-tech stocks will only go up, which is a risky signal from a behavioral economics standpoint. When the rally becomes too rapid and excessive, it is usually followed by a sharp correction, he said.


Leading robotics player Unitree has seen its price slashed by nearly 36 percent from its first-day closing high of 845 yuan on Aug 19.


STAR 50 Index, which tracks the heavyweight stocks, has shed 9 percent since Aug 17, mainly due to the slide in the semiconductor sector.


Yang Delong, chief economist of First Seafront Fund, said the recent fluctuations are simply market corrections. Semiconductor, chipmaking and computing companies, which benefit from China's economic restructuring, are showing considerable investment value after the latest adjustments.


Fang Yi, chief strategist of Guotai Haitong Securities, said increasing allocation to companies with higher and stable dividends may be a good choice in the fourth quarter to balance risks. But the market's interest in emerging technologies will remain unchanged.


Pan Helin, a member of the expert committee for information and communication economy under the Ministry of Industry and Information Technology, called for more participation of long-term and patient capital for emerging technologies.


Market transparency and information symmetry should be further enhanced to eliminate the informational edge that fuels short-term hype. Stable policies and a more predictable macro environment will give capital the confidence to stick around, he said.