So, you want to quintuple your money in a day? Investors in Anji Microelectronics got just that. The semiconductor parts maker was part of the first batch of stocks to list on Shanghai’s  Star Market, a would-be Asian rival to Nasdaq. Investors cheered China’s most notable attempt to promote direct financing and deregulate markets since launching ChiNext, a similar attempt, a decade ago. Funds poured into Star Market. But history suggests these spectacular gains are overdone. 

There is no doubt that the timing is right. Tensions with the US mean Chinese unicorns are turning away from New York as a listings venue. Star Market should also help to soak up funds flooding into China. Some $70bn of inflows are expected following the MSCI and FTSE A-shares quarterly rebalancing in August. 

The runaway gains on some Star Market names reflect the decision of exchange authorities to place no daily limit on price moves during the first five trading days. But rises were largely at the expense of other indices. On the same day, all other Chinese markets, including the Hang Seng, Shanghai Composite and ChiNext fell more than 1 per cent. Trading volumes declined, pointing to the same investors shuffling funds on to the hot new board.