An effective cap on Initial Public Offering prices at the Shanghai Stock Exchange has concentrated value gains in the primary market, where investors such as mutual fund managers have rushed to take advantage of IPO subscriptions prior to listing firms’ debuts and raked in subsequent gains in the secondary market as the shares are spurred higher by a bull market, The Financial Times reported. Short-term interest rates also regularly jump in advance of big listings because investors must borrow funds to participate in the bourse’s IPO subscription lottery. This week’s IPO of Orient Securities (600958.SHA) was 90 times oversubscribed, meaning more than RMB900 billion in funds were frozen for about a week.
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