Excessive valuations

The tremendous enthu-siasm that investors showed when trading of the 28 companies listed on China's Nasdaq-style start-up board debuted yesterday is a public endorsement to the government's effort to build a multi-tier capital market system.

The event, a milestone in the nation's capital market reform road, means a lot for widening investment channels, stimulating public enthusiasm for entrepreneurship and boosting domestic venture capital and private equity investment.

However, if the ChiNext market is to serve the long-term interests of both Chinese investors and small companies, the market watchdog must take more aggressive measures to address the problem of excessive valuation, which usually results in drastic market fluctuation.