Beijing Exchange’s IPO Frenzy Spurs Arbitrage and Regulatory Tightening
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The Beijing Stock Exchange (BSE) has delivered debut gains of several hundred percent this year — levels rare in major equity markets — drawing in arbitrage capital and prompting regulators to tighten IPO allocation rules.
The frenzy took hold after the BSE loosened IPO allocation rules in April, enabling small private funds to exploit nearly risk-free spreads between primary and secondary markets. Many funds rushed into IPO allocations as strategic investors and then sold their shares as soon as lockups expired — a practice technically compliant but widely criticized.
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- BSE IPOs in 2025 averaged 355% first-day gains, with Harbin Shimada Big Bird Industrial surging over 1,200% on debut.
- Regulators tightened rules after small private funds exploited near risk-free IPO returns, barring them from strategic investor roles and cutting their allocations.
- With private funds barred, insiders, such as executives, captured large gains, further fueling market interest and controversial profit-sharing practices.
- Harbin Shimada Big Bird Industrial Co. Ltd.
- Harbin Shimada Big Bird Industrial Co. Ltd. saw its shares skyrocket over 1,200% on its debut on November 21st, driven by a surge in demand for IPOs on the Beijing Stock Exchange. This remarkable performance highlighted the significant profits available to strategic investors. In Harbin Shimada's case, an employee asset management plan, involving three executives, received 60% of the strategic allocation, resulting in substantial paper gains on the first day of trading.
- April 2025：
- The BSE loosened IPO allocation rules, enabling small private funds to exploit spreads between primary and secondary markets.
- Late September 2025：
- The BSE reversed course, barring private funds from acting as strategic investors in IPO placements and reducing the portion of IPO shares reserved for strategic investors to 10%.
- Nov. 21, 2025：
- Harbin Shimada Big Bird Industrial Co. Ltd. debuted on the BSE, soaring more than 1,200%.
- As of Dec. 10, 2025：
- The average debut gain for the 24 IPOs on the BSE in 2025 was 355%.
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