Ipo Underpricing In Hong Kong Gem Market Research

The Hong Kong Growth Enterprise Market (HKGEM) established on November 15 1999 undertake the special tasks to promote the development of Hi-Tech and start-up enterprises in Hong Kong, drive the adjustment of the Hong Kong economic structure and the listing corporate structure of the security market. Though the development of the HKGEM goes through a lot of setbacks, the status of it is even more important in the Hong Kong economy and the capital market.According to general practice of the international security markets, new stock issue price often low to closing price of the first day, it means that the issue of the new stock exists the IPO underpricing. At present, there is no document carry systematic research on the HKGEM IPO underpricing, while this paper have studied it in an all-round way adopting the theoretical research method combine with the positive research method on the basis of drawing lessons from foreign relevant research.This text sets out from the market analysis of the HKGEM, have analyzed the HKGEM in an all-round way from the three aspects of market characteristics, market index and issuance and pricing way of stocks. It have studied the price decision model and the issuance and pricing method of the stock correlated with IPO underpricing on the growth market, then have carried on the theoretical research to the IPO underpricing on the HKGEM on the basis of combining to market analysis of the HKGEM. In the positive research part, it have carried on statistical analysis to the IPO underpricing of the HKGEM from four angles of different years, different trades, weather have venture capital background and main business in different areas separately, and examine the real example in inside and external factors that influence IPO underpricing on the HKGEM through setting up the multifactor regression model that maybe influence the IPO underpricing.Through analysis, we think that because the developing stage, market environment and investor's state of the HKGEM are different from that of overseas, the theory and method that foreign scholars used tostudy IPO underpricing from the angle of new stock issue in terms of the Effective Market Hypothesis (EMH), can not well apply to the HKGEM. We should understand and research it in terms of fluctuation of the stock price on secondary market and psychological expectancy of investors under the influence of market environment.Finally, on the basis of summarizing the IPO underpricing on the HKGEM, according with the conditions of our country, we propose adopting the market-based mechanisms of stock issuance and pricing in the course of construction of growth enterprise market in the mainland in future in order to improve the efficiency of trade and disposing of the market.