A Study Of The Phenomenon Of "Hot Issue Market" In China IPO Market

The IPO (Initial Public Offering) market is a bridge between enterprise and investors and it is very important to the existence and the development of the secondary market, it's also an important financing method for enterprise. The phenomenon of "hot issue" market is one of three phenomenons in IPO and is confirmed since the 1970s by the scholar, now more and more research scholars start to study this phenomenon.In Our IPO market, for long time, the IPO first day return has been at a exception high level, it seems that there exists a lasting "hot issue" market in our IPO market. Until now, the Chinese "hot issue" phenomenon has not been explained convincingly, the correlation theories research are also quite few. It is very important to research the phenomenon of "hot issue", because it can speeds up China Stock market's construction and system's consummation.This article from the beginning has made the exhaustive summary to the present research and rationale of the "hot issue" market. This article also explained the theory of under pricing Ratio and the amount of IPO, which are the two key aspect in hot issue market. All they are advantageous for us to understand the produces intrinsic mechanism of the phenomenon of "hot issue" market. Then this article has analyzed our country special Issuing mechanism, which can help us to examine whether our IPO market has the phenomenon of "hot issue" market. In this article, we divide the sample to two stages according to the change of issuing mechanism, and we hope to find whether the two stages have the phenomenon of "hot issue" market. The empirical analysis proved that two stage our IPO market have the phenomenon of "hot issue " market, but the phenomenon in two stage's actually caused by the different factor, the first stage appeared the phenomenon is purely by the old Issuing mechanism. The old Issuing mechanism causes the unbalance of supply and demand, the demand is larger, but the supply is few, so the first return is very high.But the phenomenon in second stages is caused by the publisher. They do the self-adjustment which according to the market capital supplies condition, the reaction of the investor in the market, income level, they have certain independency. This indicated that the Special issuing mechanism is the crucial factor of which caused to phenomenon of "hot issue" market, it can Explains that the reform of Issuing mechanism has the result. The reform has result, so reform in our IPO market appears especially important.