Research on the IPO underpricing of the Hong Kong growth enterprise market
Authors: Deng, C., Bai, B., Zeng, L. and Hölscher, J.
Journal: Investment Management and Financial Innovations
According to the general practice of the international security markets, the new stock issue prices are often lower than the closing price of the first day. This means that the issue of the new stock exists in the Initial Public Offering (IPO) underpricing. This paper analyzes the HKGEM in an all-round approach from three aspects of market characteristics, market index and issuance pricing of stocks. It further studies the price decision model and the issuance pricing method of the stock correlated with the IPO underpricing on the growth market, and carries out a theoretical research into the IPO underpricing of the HKGEM on the basis of a combined market analysis of the HKGEM. The finding of this paper reveals that it carries out the statistical analysis of the IPO underpricing in the HKGEM from four perspectives for different years, different trades, and that whether there is a venture capital background on the main business in different areas separately. In this paper, we consider that the developing stage, market environment and investor state of the HKGEM are different from those in the developed nations. © Chao Deng, Belinda Bai, Lisha Zeng, Jens Hölscher, 2010.