Long Line for First Mainland IPO in a Year
June 9th, 2006Beijing-based China CAMC Engineering (中工国际 Zhong Gong Guoji), the first IPO out of the gate since the PRC mainland ended it’s year-long ban on IPOs, has been warmly welcomed by investors—it’s 576 times oversubscribed.
Historically shares in China do initially “pop” above their issuance prices. Those issuance prices are set, some would say artificially depressed, with “guidance” from the CSRC. Thus, investing in any mainland IPO usually guarantees a good return (hence the enthusiasm for subscribing to them). In fact, when China’s markets “violently fell” (暴跌, baodie) on Wednesday of this week, some blamed the fall on the announcement that the Bank of China was applying for an A-share listing or blamed other rumored IPOs. There idea is that everybody will sell shares (depressing prices) to raise capital to enter these IPO lotteries (you have to deposit cash in advance to have a shot at getting shares in an IPO).
China Daily reports on CAMC’s success here, and Mark O’Neil reports here on this and other recent market developments for the South China Morning Post (sub. required).
Last week I noted reports that CAMC and two other firms that will be among the first to list now that mainland China’s IPO drought is over.