The biggest Star market this year goes to Shanghai United Imaging Healthcare (SUIH) after winning a $1.96bn IPO. Remembering about the firm’s disappointing debut, they must be careful in pricing the float. This Chinese diagnostic imaging device manufacturer cleared a hearing at the Shanghai Stock Exchange for their Nasdaq-style market listing. They would comprise above 100m shares. It would cover 10%-12.1% enlarged capital plus 15% greenshoe.
Next, they would register the float with the China Securities Regulatory Commission. Sometimes it would take approximately two months. Bankers chosen for this deal began to closely monitor market situations. It is because 16 of the 23 Star IPOs from March 1 to April 20 fell on their debut day. At the same time, their SSE Composite Index also dropped 9.6%.
Previously, Vanchip Technology reported the biggest debut fall on the Star market since its 2019 establishment. Their shares in the fabless semiconductor company crashed 36% to Rmbb42.60 following its Rmb2.8bn IPO. Learning from this situation, retail investors subscribing for a combined 11% of Beijing Jingwei Hirain Technologies decided not to take their shares.
Market condition is severe, Chinese automotive electronics maker plunged 17% on their debut. So, retail investors do not pay under 1% of their shares. Some blame the situation on the weak debuts on the secondary market. The weak market performance is bad due to Covid-19 cases in China plus Russia invasion of Ukraine.
Therefore, investors are majorly taking the wait-and-see approach. Practically, it means that the new shares cannot perform well as long as the secondary market is not good. In order to calm the client, some fund managers sold IPO shares on the debut day.