By 6 November, the average P/E (price/equity) ratio, which reflects the rate between stock price and the net asset representing each share, had surpassed 100, while most conventional stock markets only have such ratios of 15 to 20. 

Unlike the US NASDAQ or Hong Kong GEM that allow loss-making startups to list, the Chinese GEM stipulates that a company qualified to issue stocks in the market must be established for three years, with two consecutive years’ profits of over 10 million yuan (US$1.5 million) and no less than 5 million yuan (US$ 0.74 million) profit for the year preceding its application for listing. 

Similar to the US NASDAQ, most of the listed firms in the Chinese GEM are technology-oriented companies. Classified by industry, electronics and pharmaceutical manufacturers are the biggest groups, with four and five firms respectively. There is one medical device maker, Lepu Medical, and one independent testing agency. 

Only one typical chemicals firm - Chengdu-based Guibao S&T, which mainly produces silicon-based sealants - is ranked in the first batch of listed companies on the Chinese GEM.  

’On one hand, it indicates that the chemical industry is rather mature, without too many innovative firms like in the fields of information technology or biotechnology,’ says Yin Xiaodong, a chemical analyst at Beijing-based CITIC Securities. ’On the other hand, it means Chinese chemical industries remain conventionally manufacturing-oriented, with few innovative technologies and technology developers.’

’In addition, giant Chinese chemical players, such as PetroChina and Sinopec, have their own research and development system, which is relatively closed to outside players. So innovative chemical technology firms can hardly find the right conditions to grow,’ Yin told Chemistry World.

No companies from the booming solar and wind power industries have been listed, despite market regulators vowing that listed firms would represent a broad range of industries.

But although the pharmaceutical firms represented on the Chinese GEM have more reason to boast about their growth prospects and fast development, none of the listed pharma companies have developed innovative drugs for the international market. 

But a professor of pharmaceutical engineering at Peking University, who refused to be named, says China’s macro environment, from the medical market to drug regulators, is not mature enough to support the country’s pharmaceutical sector to independently develop its own drugs. 

’Why do we need something to challenge the mature pharma sector in the West? If we can quickly, efficiently and economically develop high-quality generics without infringing on the patents, this is a great achievement,’ he told Chemistry World.