IPO Fund Raising and Chinese Markets IPO Suspension

Abstract

During the period spanning from 2007 to 2021, China had substantial increase in its Gross Domestic Production (GDP). However, it is noteworthy that this rise was not mirrored by a commensurate expansion in China's A-share market. When examining the performance of China's stock market in relation to other major global economies within the same time frame, it becomes evident that the overall returns of China's stock market are comparatively lower. For example, Standard & Poors 500 increased 236.11%, Nasdaq Composite Index increased 547.75%, the German Stock Index 30 increased 109.99%, and Nikkei Stock Average (Nikkei 225) increased 66.21%, whereas Shanghai Stock Exchange Composite Index increased 33.41%. Based on the monthly Initial Public Offering (IPO) proceeds of China's stock market from 2007 to 2021, this paper comprehensively examines the impact of IPO activities on China's stock market, including the correlation coefficients among IPO fundraised, index amplitude, index return, and GDP. By studying the correlation between the Chinese All-securities Index (CSI) data and IPO fundraising, as well as exploring the impact of policy changes on the market, it can be concluded that IPO fundraising itself has a limited impact on market returns. The low yield in China's country's stock market might be due to corporate information asymmetry, corporate information fraud, and imperfect supervision. The contributions of this paper include the summary and interpretation of China's IPO and related data, the interpretation of China's IPO reform and other policy actions, and the suggestions for the future development direction of China's market.