Analysis And Data Studies On The Phenomenon Of The Hot Issue In The IPO Market Of China

The IPO market is the basis for the overall stock market, where government, listed corporation, intermediaries and investors are involved. The efficient and normative operation of primary market is crucial to corporate finance and long-term healthy development of stock market. This thesis purposes to study the phenomenon of the hot issue market of IPO with Chinese data empirically. Analyzing the existence of hot market phenomenon and its causes is significant to improve the issuance system of China’s stock market.First, this thesis presents domestic and foreign literatures on IPO hot issue market phenomenon. It also examines related theories of IPO hot issue market phenomenon, especially on the analysis of the under-pricing rate and the issuance quantity which affect hot issue phenomenon substantially. Second, this thesis indicates reasons of IPO hot issue in China’s stock market and presents factors affecting IPO hot issue. Third, it conducts the empirical analysis of IPO hot issue (issue volume and initial return ratio of the IPO) with Chinese data in1994:01-2012:10. The result is that there is no close correlation between initial return ratio and IPO volume, which indicates that the phenomenon of hot issue market was not remarkable in Chinese stock market. Finally, this thesis provides policy suggestions.