Zhang Xiuli says she knows nothing about the nine mainland companies that held initial public offerings last month. Not a problem. Zhang, 37, tried to buy shares in each and every one, confident that she knew what was coming next: an immediate surge in price that has rewarded investors in mainland floats with an average first-day gain of 43 per cent this year. Her orders were among 655 billion yuan (HK$824 billion) of bids for 3.2 billion yuan of new shares, an over-subscription rate 28 times bigger than that for the listing of Agricultural Bank of China at the height of the mainland offering boom in 2010. New stocks have regained their reputation as cannot-lose bets on the mainland just four years after that last frenzy ended badly - a majority of offerings in the second half of 2010 saddled investors with losses within a year. Ding Yuan, a professor of accounting at the China Europe International Business School in Shanghai, said regulatory efforts to ensure deals were not overvalued had led speculators to ramp up bets with borrowed money and hurt plans to let the market, rather than the government, set prices. "The relationship between demand and supply is distorted," Ding said. "Fundamental analysis is meaningless because prices are kept low." The offerings underline the challenges facing the mainland authorities after President Xi Jinping pledged in November to give markets a "decisive" role in the US$9 trillion economy as part of the most sweeping set of reforms since the 1990s. Lin Jin, a senior analyst at Shenyin & Wanguo Securities in Shanghai, said the perception that listings were riskless had encouraged some investors to use borrowed money, exposing them to deeper losses once prices stopped climbing. The mainland's benchmark money-market rate rose the most in three weeks on July 23 as orders for five offerings spurred an increase in demand for borrowed funds. The central bank said on Wednesday that the deals helped fuel a record drop in yuan bank deposits last month as customers shifted funds to their brokerage accounts. "The main risk is whether borrowing costs can be covered," Lin said. "As new share sales become the norm, the effect will taper off and returns will decrease." The rush by investors into mainland listings, which have rallied an average of 94 per cent from their issue price this year, or seven times more than the global average, contrasts with lacklustre demand in the broader stock market. Traders have liquidated about 1.3 million mainland equity accounts since the end of March, leaving the number of funded accounts at a four-year low of 52.55 million. The benchmark Shanghai Composite Index gained about 5 per cent this year, versus a 6.8 per cent increase in the MSCI Emerging Markets Index. The mainland gauge has dropped 29 per cent in the past five years, compared with a 25 per cent advance for the MSCI measure. All nine mainland companies that had offerings last month sold shares at price-earnings ratios below the industry average. The China Securities Regulatory Commission requires any firm pricing stock at levels above its peers to postpone the offering by three weeks and issue risk warnings to investors. Guangdong Taicheng Pharmaceutical, a traditional Chinese medicine company, attracted bids worth 337 times the 350 million yuan of shares for sale after pricing its offering at 17.5 times earnings, about half the average level of listed rivals. The stock has more than doubled since it began trading on July 31. "The Chinese market is about speculation," said Teng Bingsheng, associate dean at the Cheung Kong Graduate School of Business in Beijing. "That's why very small companies can be pushed up, even with small amounts of money." According to a Credit Suisse study - which looked at 437 mainland offerings from the start of 2011 to the end of November 2012 - investors had an average gain of 23 per cent if they sold flotation shares after one day of trading, but lost an aver- age 42 per cent if they held for a year.