Shares on ChiNext, China's Nasdaq-style board for startup companies, were already experiencing big discounts just one week after the board's launch on October 30.

Some ChiNext-made millionaires and billionaires are offering 50 percent off the latest share prices to potential buyers through pledge contracts, even when the shares are still subject to a one-year lock-up period.

As of November 18, share prices of the 28 ChiNext-listed companies had all dropped by more than 20 percent from their ceiling prices.

Li Ming (alias), a private equity investor, has been receiving calls touting ChiNext shares since November.

"Huayi Brothers is offering a 50 percent discount on more than 2 million shares, and the lock-up period is only one year," said Li, who revealed that he had been contacted by one of the company's top 10 shareholders of tradable shares.

The filmmaker Huayi Brothers closed at 57.26 yuan on November 18, a fall of 34.54 yuan from its peak price of 91.80 yuan, although it was still well above its issue price of 28.58 yuan.

Wu Kezhong, president of the private equity fund PreIPO, has also been approached by shareholders of ChiNext-listed companies.

"Those selling shares are largely minority shareholders," Wu said.

"Shareholders are reducing their holdings in a disguised form," said He Xianbo, partner of the Guangdong-based China Commercial Law Firm. "They are selling shares at a discount of 30-50 percent through a pledge contract and then transferring the shares to the buyers through fake arbitration when the lock-up period ends."

The selling spree seen on ChiNext is a sign of shareholders' lack of confidence in the future growth of the companies. Wu said this move displays shareholders' eagerness to cash in on the overvalued shares.

According to a venture capital investor, shares for Huayi Brothers should be reasonably priced at 28.58 yuan, as the company still faces big uncertainties in its future growth. "Huayi Brothers is only a filmmaking company – it doesn't have its own cinemas," the investor said.

However, the shares up for grabs have met a cold shoulder from some large investors. A general manager with a Shanghai private equity fund said the Nasdaq-style board still faces two major risks: overpriced shares and uncertainties regarding the new market and the growth of its listed companies.

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