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 capitalize 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.
“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 (600570.SS), as a reasonable bet.
Highlighting how some companies are tapping into the speculative interest, the Shanghai Stock Exchange questioned Shanghai U9 Game Co (600652.SS) 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 (KODK.N) 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.”
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