A Preliminary Study of the Emerging and Developing Stock Market of China

Abstract

The Chinese share market as an emerging and fast-growing listing venue has experienced a significant development since 2000.Prior studies on this market overwhelmingly concentrate on IPO-pricing-related and post-IPO performance-based propositions with lagging data. Adopting the updated data within the last couple of years, this paper comprehensively explores and accounts for some striking features of the Chinese stock market, and unfolds some new causes contributing to these characteristics.

Some new findings are revealed. 1) Two new factors may lead to the extreme under pricing in China’s market, which are the unseasoned investor sand their high demands of IPO shares. 2) The foreign-currency trading platform is not effective and efficient to attract the overseas investors. 3) The imbalanced industry structure of the listed firms is very significant, the Chinese share market is dominated by the manufacturing firms.4) The Growth Enterprise Market of China is essential to address the long-standing financing difficulties for the Chinese Small and Medium-sized Enterprises, which are unqualified to raise capital from the Primary Stock Market.