Caixin Explains: Why Newly Listed Chinese Stocks Fall Below Their IPO Prices
Investing in Chinese IPOs was once hailed as the safest of safe bets, with guaranteed huge returns to investors. The rationale was that the stock of a newly listed company would almost certainly rise well above its offer price, a pattern that had held true in most cases for many years.
But this formula has not always seen success in recent times.
This year as of April 20, 62 out of 107 companies that went public on the Chinese mainland saw their share prices drop below their offer prices, with nearly half of the 62 stocks trading on Shanghai’s Nasdaq-style STAR Market, according to Caixin’s calculations.
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