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China’s biggest investment bank CICC in tame stock market debut that may signal shifting focus of traders

  • China International Capital Corporation failed to maintain the 44 per cent maximum surge typically seen for new shares listed on Shanghai’s main board
  • Analysts said it could signal a new trend in which traders are paying more attention to the valuation of new stocks

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A China International Capital Corporation securities brokerage branch in Beijing. Photo: Bloomberg
Yujing Liu

China International Capital Corporation (CICC), the country’s biggest investment bank, saw its share price fall back after shooting up to the daily maximum briefly on its debut in Shanghai on Monday.

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The relatively calm debut is something of a rarity for new stocks in mainland China, which tend to skyrocket past the upper limit of 44 per cent and remain there for the rest of their first day, with trading suspended until the price drops back below the threshold. CICC’s shares were only suspended for about half an hour after the market opened on Monday.

Analysts said it could signal a new trend in which traders are paying more attention to the valuation of new stocks.

Shares of CICC fell back to 37.70 yuan by market close, 31 per cent higher than their initial public offering (IPO) price of 28.78 yuan, after hitting the 44 per cent top limit briefly when the market opened. Turnover stood at 4.9 billion yuan (US$731 million). The Shanghai Composite Index ended flat after a choppy session.

In a market where the supply of new shares is highly controlled by the regulators, stocks listed on the main board typically shoot up by the maximum permissible on their debut. For companies that go public on the technology-themed Star Market board, the jump can be even more stunning.
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CICC’s failure to maintain the 44 per cent advance could be a sign that China’s domestic traders – the majority of whom are retail investors – are getting more cool-headed about the valuations of new shares, especially those in traditional sectors such as finance, according to analysts.

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