Analysts said the gains were being driven by China's desire for a strong market debut and unrealistic expectations among investors, fueled by state propaganda. They warned of a hangover to come.

"This [surge] is crazy," said Ronald Wan, chief executive of Partners Capital International in Hong Kong. "But it's already overdone. I don't think such gains can last long. It's way too speculative."

Star-listed companies were worth 120 times earnings on average by the end of the first day, according to Chinese market data provider Wind. Stocks on the Nasdaq and Shenzhen's tech market typically are worth 24 times earnings, according to Refinitiv data.

Previous attempts by China to create a rival to Nasdaq in 2009 and 2013 failed because of a lack of quality listings and limited turnover in shares. Shanghai's Star Market might be different.

It's the first time a Chinese president has announced the establishment of a stock exchange, highlighting the extent to which Beijing hopes that the board will help China become the dominant player in the technologies of the future.

The country's top securities regulator says the new Shanghai market will welcome innovative companies in six emerging industries of "strategic significance." They include next-generation information technology, smart manufacturing, aerospace, new materials, renewable energy and biotech.

The sectors all align with Beijing's Made in China 2025 initiative and the latest five-year plan, which aim to transform the country into a manufacturing superpower that dominates high-tech industries.

Regulators have introduced some significant changes for Star. In a first for China, the market allows companies that are losing money to list. Piloting a US-style registration IPO system, it has also streamlined the application process and given issuers and investors greater control over the pricing and timing of initial public offerings.

Of the first batch of 25 companies that began trading Monday, 24 were listing for the first time. In total, the 25 companies raised more than 37 billion yuan ($5.4 billion).

"To break the foreign monopoly and develop [our] integrated circuits testing industry, we need continued investments in research and development. Tapping the capital market will give us the biggest boost," Suzhou HYC Technology chairman Chen Wenyuan told the state-run Shanghai Securities Journal.

Star's initial lineup also includes chipmakers, AI companies, biotech firms, electric-car battery makers, and suppliers for high-speed railways. There's a pipeline of more than 100 companies waiting to list, according to the Shanghai stock exchange.

The new tech board has fallen into line with the New York Stock Exchange, Nasdaq and Hong Kong by allowing listings of companies with dual-class shares or weighted voting rights.

That change is aimed squarely at attracting Chinese tech companies currently trading overseas. Both structures are popular with entrepreneurs because they allow them to retain control after going public.

"I believe that the leading Chinese tech companies will return because of better valuation, and favorable policies," said Hao Hong, managing director and head of research at BOCOM International.

"Policymakers clearly don't like the fact that, despite huge domestic savings, the best Chinese companies such as Alibaba still have to go abroad to raise money," said Larry Hu, head of China economics research at Macquarie Group.

Last year, smartphone maker Xiaomi was the first company to go public in Hong Kong with weighted voting rights after regulators changed the rules to attract more tech listings.