A Study On The IPO Pricing On The Science And Technology Innovation Board And Initial Listing Performance

In recent years,China’s securities market has shown a trend of rapid development.The market system has been formed of Main Board,Growth Enterprise Board and Small and Medium-sized board,which has enriched financing channels for many enterprises.The Science and Technology Innovation Board established in 2019 has further enriched financing channels for high-tech enterprises.especially solved theproblems of financing difficulties for those with strong technology attributes but still can not meet the listing conditions of other sectors,It has indeed injected a strong impetus into the development of high-tech enterprises from the performance of the Science and Technology Innovation Board in the past two years,the number of listed companies on the Science and Technology Innovation Board has exceeded three hundred at present.Despite its great support for innovative enterprises,a lot of worrisome phenomenon accompanies.For example,many Science and Technology Innovation Board stocks skyrocket upon IPO,but lose all their strength to rise higher in the following years,and some may even fall below their IPO prices.People wonders how the trading price of a stock on its listing day might affect its performance in the short term.First,this paper collects data of IPO pricing indicators,including the P/E ratio and P/B ratio on the listing day,number of IPO stocks,and ages of the enterprises,and analyzed their correlation with performance of the stocks after IPO.It was found that the fall in stock price of Science and Technology Innovation Board enterprises accompanies a decline in their valuation.Moreover,the Science and Technology Innovation Board stocks tend to have a high IPO premium rate,which may in part attributed to insufficient number of IPOs and the low issuance winning rate.Then,average cumulative excess return rate of the sample Science and Technology Innovation Board portfolio in 18 months of their IPOs was calculated and compared with that of ST50,the result showed that Science and Technology Innovation Board stocks performed poorly in this period.The 223 stocks in the sample portfolio were then analyzed individually.Stocks that rose 100%-300%in the selected period were most common,many stocks reached their half-year high within the first 3 months,and about a quarter of the stocks listed before January 31,2021 had at least once fallen below their IPO prices.At last,the performance of the sample Science and Technology Innovation Board portfolio was compared with that of a sample Nasdaq portfolio,and it was found that the Nasdaq portfolio shows a milder rise than the Science and Technology Innovation Board stocks on the first day,but sustains a stronger rise in the following two years after IPO.Meanwhile,the Science and Technology Innovation Board stocks did grow,but were much weaker in the following two years,especially in the first half year.It’s obvious that sharp rise of Science and Technology Innovation Board stocks over-drafted future growth.