Analysis Of The Gem IPO Underpricing And After Market Trend

This paper mainly studied the difference between the IPO underpricing in the GEM and in the main board, then analyzed the cause of this difference, studied the trend of the GEM in short mid-term, then we predict its long-term tendency and give some pointed advice to different investors.We refered some common financial indicators and assuming these indicators in the GEM are different from the main board, causing the different underpricing rate between them. Then we verified our assumption by collecting the data and studying their correlation. We come to a conclusion that the lottery rates of subscription and exchanging rate of the first circulating day mainly result in the difference of the IPO underpricing between the GEM and the main board.We introduced relative yield rate and chose the data of the initial 100 trading days of the first 28 firms to list when studying the short mid-term changing trend of the shares, then examined it by using the relative yield rate of the new stock portfolio. Our result reveals that the trend of the IPO price in the GEM shows an unconspicuous weak performance, while in the mid-term a strong performance. In the reminder, we analyzed this year’s bull market in the GEM of this year, and provided some causes other than the data which contribute to the strong performance in mid-term of the stocks in the GEM.At the end, we give some advices to different investors when they trade in the GEM according to the conclusions.