As cryptocurrencies are getting crushed during 2018, has the hype around blockchain died down in the mainland Chinese stock markets?

Since January this year, a growing number of Chinese public companies—ranging from gaming companies to IT services firms—publicly link their business with the emerging technology to take advantage of blockchain mania to help push up their flagging share prices.

These initiatives have drawn attention from Shanghai and Shenzhen stock exchanges which focus on self-regulating public firms to comply with securities law in China. The two bourses repeatedly investigate these firms, sending inquires to them and even suspending the trading of their stocks.

According to China’s state-run Securities Daily, a total of 80 public companies include blockchain as part of their business strategy, and 23 of those firms have been questioned by the Shenzhen and Shanghai Stock Exchanges this year. Two-thirds of this type of examinations occurred in the first quarter of this year.

Data from Hithink Flush Information Network Co. Showed that over 70 out of 80 blockchain related stocks in China have surged by the 10 percent daily limit in 2018, and 7 stocks surged by the daily limit for over 10 times. Although some companies did not disclose their blockchain business in details, it was not difficult for them to drive up the share price amid the blockchain mania.

When questioned whether they were taking advantage of blockchain hype to intentionally push up their share prices, these public firms got used to using key words like “ exploration” or “research” rather than “ applications” or “ use cases” to describe their blockchain-related initiatives. They said the blockchain business did not materially impact the company’s overall performance

Securities Daily noted that 13 out of the 23 questioned public firms were suspected of using blockchain concept share prices as they failed to introduce application products based on the technology.

Besides, only 10 blockchain- related public firms in China have applied blockchain technology to several industries, such as entertainment, medical care, energy, and finance. Among them, 4 have explored blockchain use cases in the entertainment industry while 3 firms are developing blockchain-related electronic devices.

As the blockchain mania gradually recedes, both investors and public firms in the country are “returning to rationality”.