Bulletin Spring‧Summer Autumn‧Winter 1999

Have You Ever Bought New Shares f r om China's Stock Market? A Research into Underpricing and Volatility of Initial Public Offerings Attraction of China's Stock Market Most people i n Ho n g Kong are familiar w i t h the stock market. Ma ny have a stake i n it, and most regard the Hang Seng index as a barometer of the local economy. China's stock market is relatively new. It is small, but has a huge potential; it is immature, yet is de v e l op i ng r a p i d l y; the pub l ic has a l i m i t e d u n d e r s t a n d i ng a nd there is l i t t l e institutional presence to provide a stabilizing force. Precisely because it is so different, it is an i n t e r e s t i ng sub j ect f o r academic s t ud y. Economic and behav i ou r al theories can be tested i n new domains. But China's stock market is of more than academic interest. It is a s ymbol of ma r ket socialism and a developing private sector, and as such a barometer of China's economic reform, w i t h obvious social and political ramifications. It is not just a tool for companies to raise capital for g r owt h, bu t also a crucial element i n the d r i v e to mo d e r n i ze t he t e e t e r i ng state enterprises and transform the who l e fabric of Chinese society. CUHK a Base of Effective Research For these reasons, China's stock market has become an impo r t ant subject of research by Research 21