Deals
China IPO Flood Seen Bursting Small-Cap Bubble
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The benchmark index for Chinese small-company stocks will probably enter a bear market after the government’s plan to resume initial public offerings sparked a record rout yesterday, Bocom International Holdings Co. said.
The CHART OF THE DAY shows the ChiNext index has rallied 76 percent since Oct. 11, 2012, the day the last IPO took place, compared with a 5 percent increase for the benchmark Shanghai Composite Index. In the three years to Oct. 11, Chinese IPOs jumped an average 33 percent on their first day of trading, according to data compiled by Bloomberg. That’s more than the average advance for shares in the U.S., Japan and the U.K., which ranged from 6.8 percent to 28 percent.