Study On Influence Factors Of The New Shares Break In China A Share Market

After the reform of shareholder structure, the Chinese capital market has entered an era of full circulation. Then with the gradual development of capital market, the wave of Chinese enterprises being listed in the A-share capital market has been raised. In the year to March, there are2528enterprises liseted in the A-share market and the total equity reached4.08trillion. Compared with last year, the size of the capital market has been further expanded. IPO (Initial Public Offer, hereinafter referred to as IPO) is a kind of enterprise listing way which is uesd to recruit capital from the public for the first time. In China, the reasons why so many enterprises are keen to be listed in share market are that IPO not only is a way of large-scale financing but also expanding the popularity and influence of enterprises, improving the liquidity of funds in the stock market.In the capital markets of various countries, it exsits a kind of phenomenon that new shares are tend to be underpricing in IPO, that is the transaction price of new shares are higher than the offering price, called new share underpricing. Due to the reasons such as Chinese capital market is still undeveloped, compared with other countries, the new shares appear to be more seriously underpriced, and the issuing market is often regarded as risk-free market, through investing new shares to gain revenue has been a common way to many investors. A large number of subscriptions are frozen and the resouces of security market has not been optimal allocated, which lead to the disorder of the capital market between issuing market and secondary market. Along with the establishment and constantly improvement of the new inquiry mechanism, high issuing price, high PE ratio and over subscribed funds lead to a common phenomenon that the first day closing prices below the level of the issuing prices, which also raise a wave of new shares break in the A-share market.The Chinese IPO market has experienced seven suspend and restart process, and the recent IPO suspend from November2012to January2014, suspended nearly13months. However, early in June2009to November2012, the seventh IPO restarts during this period, there are144among the885new listing shares undergoing new shares break on the first day. Only in2011, a third of listing shares experienced new shares break on the first day. Under this background, whether the new shares break can effectively reflect the achievement of new share issuing mechanism reform or not has been a mystery. Therefore, the influence factors of new shares break has been the study focus to many scholars.Based on the study of the new shares break during the seventh IPO restart, the thesis futher explores and analyses the influence factors of new shares break, supplemented by a typical case. Firstly, the thesis induces and concludes the foreign and domestic research literature about the new shares break, listing some relevant theoretical knowledge and attitudes of scholars to provide reference for analysis. Secondly, statistical analysing data and charts of all the listed new shares and the breaking new shares during the seventh IPO restart. Thirdly, in the view of previous theoretical and statistical analysis, according to the progressive logic, the thesis summarizes the influence factors of the new shares break. Next, based on the previous summarized influenced factors, analyzing the situation of the typical case, to explore the specific factors and common factors which influencing this case. Finally, the thesis put forward some policy suggestions on the new share pricing mechanism, supervision strength, information disclosure system and the education of investors.Through the analysis and discussion of this thesis, the following conclusions are being reached finally:firstly, the downturn of the capital market environment is more likely to cause new shares break phenomenon, but this is the most basic and superficial reason. Secondly, behind the reason of the downturn enviroment, the frequent phenomenon of "three highs" also exert great impact on the new shares break, and high issuing price is the most important factor among them. Thirdly, high issuing price refelcts the disadvantages of the new share pricing mechanism, which lead to the offering price deviates from the actual price to some extent. Finally, the drawbacks of the new share issuance mechanism drive stakeholders to pursue their own interests, the issuers, inquiry institutions, underwriters and sponsors can hardly absolve themself from the blame.