Stocks on ChiNext, the country's NASDAQ-style board for domestic start-up firms, rode on a roller coaster on the first two trading days: soaring at debut and taking a sudden turn on the second day.

Twenty stocks out of the total 28 fell by the daily limit of 10 percent at Monday close, compared with an average of 106.23 percent surge on Friday, the first trading day, driven by a speculative surge for quick profits.

About 252,600 individual investors bought 423 million new shares at ChiNext on Friday, accounting for more than 97 percent of all new shares on the market.

The average price-earnings ratio for the initial public offering prices was at around 55.70 times, and then was pushed up to around 111 times, much higher than 25.98 times and 37.80 times at main boards in Shanghai and Shenzhen bourses respectively.

The bubbly opening led to warnings of risks posed by excessive speculation and inflated stock price.

Jin Yanshi, chief economist with the Sinolink Securities, said the price-earnings ratio was too high driven by the irrational buying spree. He said the frenzy would gradually cool off, and he expected a 30 percent to 50 percent drop of share prices in three to six months.

Analysts said it was typical in China that new shares would face speculation at debut and see large initial gains, followed by a continuous pullback.

China State Construction Engineering Group shares soared more than 60 percent at debut in Shanghai on July 29 from a initial public offering price of 4.18 yuan and ended at 6.53 yuan, up 56.22 percent. On Monday, its close price stood at 4.79 yuan.

It also reminded of the launch of board for small and medium-sized enterprises at Shenzhen Stock Exchange market on June 25, 2004, when shares of eight new stocks rose more than 130 percent. The share prices fell by an accumulative 40 percent from the close prices on the first trading day three months later.

China made plans to launch the NASDAQ-style board for trading of start-up shares in 1999 to boost development of small and medium-sized enterprises. The plan was postponed in 2001 when the Internet bubble burst in the United States.

Since 1962, a total of 39 nations or regions have launched 75 such boards for start-up companies to raise funds. However, about half of them ended up closing due to weak market sentiment and regulatory inconsistencies, and 41 markets were operational as of the end of 2007.

The Growth Enterprise Market, kicked in Hong Kong in 1999, was a luck luster as investors were scared away by the plunge in value of technology stocks in 2001. The index fell about 90 percent since then.

By contrast, NASDAQ set up in the United States in 1971 has been a successful one, which attracted giants like Microsoft and Intel, and became the major market for overseas listing of Chinese enterprises. There are currently 116 Chinese companies listed on NASDAQ, including Baidu.

Analysts attributed the main reasons for failure of some markets to blindly lowering threshold of market entry, poor supervision and inactive transaction.

Shang Fulin, chairman of the China Securities Regulatory Commission said on Oct 23 that trading on the new board may have a probability of becoming "irrational" than on other bourses.

"Preventing risk is our main task," he said. "We'll make sure risk is estimated, detected and controlled."

The Shenzhen Stock Exchange issued special suspension rules to clamp down on speculation. Trading would be suspended for 30 minutes if share price rises or falls by 20 percent from its debut level. If a stock fluctuates again beyond 50 percent of its opening price, it will be suspended for 30 minutes. The stock can also suspend a stock until three minutes before the close of trading session on a rise or drop above 80 percent.

Zuo Xiaolei, chief economist of the China Galaxy Securities, said the lesson from failure of other markets showed the key to the success of such start-up board was to strengthen supervision while completing rules, which would ward off excessive speculation and rule violations.

The government should develop more policies to attract more firms with great potential growth to make the board bigger and stronger, but threshold for access to the market should not be lowered, analysts said.