Chinese investors are always fascinated by market concepts and their latest favorite seems to be companies involved in developing networks that could get every "thing" connected.
Last week, shares of electronics firms rocketed on expectations that the development of a new "Internet of Things" technology would revolutionize businesses in the country.
The technology, also called "sensor networks" or "Machine-to-Machine Internet", refers to a network of all objects from daily life such as clothes, yogurt and books with radio tags that could be interconnected, identified and managed by computers.
Although the technology itself is not new, the market buzz started last Monday when the Standardization Administration of China (SAC) approved the establishment of a sensor network standards working group under the China National Information Technology Standardization Technical Committee.
The working group brings together institutions involved in research and application of sensor networks, including SAC and China Mobile, the world's largest telecom carrier, to expand standardization in the field and to participate in international standardization efforts.
That move resulted in shares of Invengo Information Technology, one of China's largest vendors of wireless RFID readers, surging by 57 percent last week. Fujian Newland Computer, which provides services in areas such as data identification, electronic payment and expressway information system, also rose 51 percent during the period.
But both companies issued statements saying that the "Internet of Things" technology was at an early stage and would not greatly impact the companies' business in the near future.
Other Chinese listed companies involved with the "Internet of Things" technology include Xiamen Xinde, Datang Telecom, Eastcompeace and Inspur Software.
"Investors are betting that the involvement of China Mobile may boost the market," said Duan Yingsheng, an analyst from Ping An Securities. "But, I don't think the technology will bring in significant business benefits for the related companies in the foreseeable future."
Duan said the "Internet of Things" technology was not comparable in significance to the emergence of the Internet in late 1990s, which gave birth to hundreds of technology firms such as Google and Amazon that completely changed the world we lived in.
He said Chinese investors' fervor for electronic companies shares last week was due to the liquidity overhang in China's stock market.
The concept of the "Internet of Things" could be traced back to 1999 when a research center at the Massachusetts Institute of Technology developed the technology for identifying items in the supply chain of companies.
Many have since hoped that the technology could be widely used in daily life, such as connecting refrigerators online so that when you run out of milk, it would order milk online, debit the bill to your bank account and arrange home delivery automatically.