Money & Banking

Future is here for blockchain, but we need to stay rational: China’s state media

Bloomberg Shanghai | Updated on October 29, 2019 Published on October 29, 2019

More than 70 tech shares surged by the daily limit in Shanghai and Shenzhen on Monday

China’s state media said that the investors should avoid speculative behaviour after comments by President Xi Jinping sent blockchain-related stocks surging on Monday.

The future is here for blockchain, but we need to stay rational, said the media.

More than 70 tech shares surged by the daily limit in Shanghai and Shenzhen on Monday, and Bitcoin rallied after Xi said China will increase investment in blockchain technology. The frenzy cooled Tuesday, with the Shenzhen Stock Exchange Information Technology Index losing as much as 1.4 per cent. Bitcoin was 2.1 per cent lower at $9,260.

Regulation for blockchain need to be improved as the technology is still at an early stage, according to the commentary published in the media. “Technical innovations on blockchain arent the same as speculative trading of virtual currencies,” it said.

“The message is clear -- companies should focus on their main business and not jump on the blockchain bandwagon, It is a warning that support for the sector does not equal an endorsement of speculative trading,” said Sun Jianbo, president of China Vision Capital Management.

China’s exchange operator also weighed in, sending inquiries to at least four firms whose shares jumped 10 per cent Monday, including MYS Group Co. The companies were asked to spell out their involvement in blockchain technology and warn investors of the many risks that could affect their share price.

Chinese investors are no stranger to speculative trades -- so far this year they have chased stocks linked to the next generation of telecom network 5G, industrial cannabis and hog breeders. While these stocks often offer some quick gains, the stakes are just as high once the trades unravel quickly.

Published on October 29, 2019
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