China IPOs First Day Results
The only thing we learn from history is that most people learn absolutely nothing from history. And history is repeating itself once again in China, with crazy returns for IPOs (which on average under perform the broader market after their first several years of being public).
Information like that below about the first day returns from IPOs in China over the past year is scary, but not quite as scary as the fact that Air China’s profits are way up year over year but their price to earnings is about 1500. This translated from this week’s Modern Weekly:
IPOs in China Way Up in First Day of Trading
How big is the gap between investors’ need for stocks and the opening price of A share IPOs in China? Over the past 12 months, 1/3 of A share IPOs have increased more than 100% in their first day of trading. The average increase in the price of A share IPOs in their first day on China’s stock markets was 97%. In stark contrast to this, mainland Chinese companies who became public in Hong Kong increased 22.5% on their first day of trading.
