Investors Take Longshot to Subscribe for Registration-Based ChiNext IPOs
What’s new: Investors are rushing to subscribe for new stocks offered under a registration-based IPO system on Shenzhen’s Nasdaq-style ChiNext board in the hope of large price jumps, but the chances of being able to buy the shares are extremely low.
The ChiNext board has adopted a registration-based IPO system to replace its previous approval-based one. Investors’ average chance of being able to get a piece of each of the seven registration-based offerings last week was about 0.017%, according to Caixin calculations.
The background: Chinese investors like buying new shares as there is a common expectation that their prices always jump in the first few days after they list. Since the start of 2019, a total of 98 new stocks have been listed on the ChiNext board, and their prices rose by an average of 96.8% in the first 10 days of trading.
Investors do not have to prepay money to subscribe for new shares, thus fueling speculation, multiple stock market specialists said.
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