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

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

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.

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.

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.

A spate of stock market reforms over the past year – including the introduction of a more market-oriented IPO system to the Star board and the ChiNext board – is set to increase the supply of new shares in the long run and improve the market’s price discovery mechanisms.


“In the future, it may become a common scenario where new shares in the A-share market won’t be able to hold up the 44 per cent maximum surge on their debut,” said Bruce Pang, head of macro and strategy research at China Renaissance.

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Moreover, mounting uncertainties in the global markets, such as the coronavirus pandemic and the US presidential election have made investors more cautious recently, he said.

Another thing that stood out to investors was the gulf between the price of CICC’s A shares and its H shares listed in Hong Kong. At 37.70 yuan, its onshore-listed shares are 140 per cent more expensive than the H shares, trading at HK$18.20 by Monday’s market close.

In the broader market, the premium of companies’ mainland-listed shares to those traded in Hong Kong has climbed to its highest level since 2008, the Hang Seng Stock Connect China AH Premium Index shows. A rapid run-up in the onshore market in July widened the gap, with the forward price-earnings ratio of the Shanghai Composite Index rising to as much as 17 times in September, the highest since the infamous 2015 stock market crash.

CICC’s Hong Kong shares, which have been listed since 2015, rose 0.9 per cent to close at HK$18.20. The stock has rallied 21 per cent so far this year on anticipation of the onshore listing.


The investment bank, one of the underwriters of fintech giant Ant Group’s jumbo dual listing in Hong Kong and on the Star Market in Shanghai, raised 13.2 billion yuan (US$2 billion) by issuing 459 million A shares in Shanghai. The funds will be used to replenish its working capital and support its business development in the onshore and offshore markets, CICC said in the prospectus.

This article appeared in the South China Morning Post print edition as: CICC bucks trend with tame trading debut in Shanghai