The Hot Issue Phenomenon In China A Share Market Production Process

The IPO market involves many participants, including governments, enterprises, intermediaries and investors. It's a bridge between enterprises and investors, an important financing method for enterprises and the fundation for the second market. Therefore, carrying on researchs in this field is of great useful.The"hot issue"phenomenon has been early confirmed by the financial researchers since long ago. In China's IPO market, for a long time, the IPO first day return has been at a exceptional high level. It seems that there exists a lasting"hot issue"market in China. Until now, the Chinese"hot issue"phenomenon has not been explained convincingly, evenworse, there does not have much literature concerning about it. Some mentioned it in there researches on the IPO underpricing phenomenon, but there is no systematical research about the IPO"hot issue"phenomenon in China. since the"hot issue"research is very important for the underpricing research and for the Chinese stock market. So, in this paper, I have tried to do some research on this topic systematically.This article consists of three parts. The first part is an introduction on the literature on"hot issue"phenomenon. In the second part, I analyze the special issuing mechanism and the equity separation and the government regulation in China. And finally I find the four market partner activity distortion phenomenon in the Chinese market.then I conduct a correlogram test between the IPO issuing quantity and the first day return. In the third part, I do some empirical test, and conclude is that a"hot issue"market exist in the China's IPO market, and there is a time lag between the issuing quantity and the first day return.