The relationship between IPOs and macroeconomic factors in the Chinese stock market

Abstract

The objective of this study is to examine the relationship between external macroeconomic factors and the number of monthly IPOs in the Chinese stock market using data from the Shanghai Stock Exchange (SSE). The study investigated four macroeconomic variables: industrial production (economic activity), long-term interest rates, stock market return, and market volatility. In simplistic terms, these four macroeconomic factors constitute the independent variables, and the number of monthly IPOs for the Chinese market constitutes the dependent variables. As stated, the data were obtained from the Shanghai Stock Exchange and consisted of Monthly IPOs from 2010 to 2020. The study also split the data set into two time periods, 2010–2013 and 2014–2020, to examine the effects of the global financial crisis of 2007–2008 on the Chinese IPO market. The period from 2010 to 2013 represents the “aftershock period,” and the period from 2014 to 2020 represents the “stability period.” By employing several econometric models, research results indicate that all four macroeconomic variables impacted IPOs in the Chinese stock market during the 10-year period under consideration.