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Reply #51: Chinese IPOs fail to live up to hype (EIGHT (%) ISN'T ENOUGH) [View All]

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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Dec-25-10 01:57 PM
Response to Reply #15
51. Chinese IPOs fail to live up to hype (EIGHT (%) ISN'T ENOUGH)

Chinese IPOs are turning into Wall Street's version of fireworks: They go up in a fantastic spectacle, then fizzle and fall to earth.

Initial public offerings of Chinese companies have been all the rage in the U.S. this year, and are accounting for roughly a quarter of all the year's deals. Investors have piled in, pushing the value of most Chinese IPOs up on their first days of trading.

But Chinese IPOs are crashing almost as dramatically. Consider that the year's 40 Chinese companies to go public in the U.S. are:

Lagging the U.S. stock market. Chinese IPOs are up 8.1% on average from their first-day closing prices, say data from Renaissance Capital and Standard & Poor's Capital IQ. That means Chinese IPOs are lagging the 12.9% gain by the Standard & Poor's 500 and 18.1% for all IPOs.

Posting losses more times than not. Nearly half the year's Chinese IPOs, 22, are down from their first-day close, the price at which most individual investors would have had a chance to buy in. And 19 of 2010's Chinese deals are below their actual IPO prices.

Relying on a few success stories. Chinese IPOs' performance is even worse if you look past the two that have been big winners, HiSoft, up 184%, and Camelot Information, up 130%. Chinese IPOs are down 2.6% on a median basis, which factors out the effect of extreme returns...
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