New shares at A-share market losing ground

New shares on the A-share market have entered the most intensive and serious phase of breaking the initial public offering (IPO) prices since the beginning of 2011, according to a China Business News (CBN) report Friday.

Stock analyst Ren Weijie said that 2010 was the year new shares on the A-share market saw the most serious phase of breaking initial public offering (IPO) prices, and the legend "New shares never fail" has actually, failed.

On Thursday, Sinovel Wind (Group) Co., Ltd., the country's biggest maker of wind turbines and Jiangsu Xiuqiang Glasswork Co.,Ltd., saw their stock prices break the offering prices on their first trading day. On January 7, Anjubao broke offering prices, and January 10, was the turn of Qingdao Haili Metal One Co.,Ltd.

According to the report, historically, there have been four rounds for new shares to break the IPO prices. The first round in 2004, and the second in January to February, 2010. The third from May to July, 2010, when 19 firms saw their stock prices closing lower than the offering prices, and the fourth, from December 2010 onward, when the ratio reached 28.57 percent.

Also, an International Finance News report on Friday, citing stock analyst Xie Zuping, said that the consecutive shaky ground of new shares is related to the A-share's issuing system.

According to him, after the system's reform in 2009, A-shares have had as role to solve the capital problems of enterprises. And the enlarging investor group leads to higher issuing prices and furtherance of speculations in the market. Some analysts believe the new shares' issuing system needs to be completed and deepened.

Analyst from China Merchants Securities said that in the short-term, the current shape will prevail.

Source: Global Times

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