China's soaring IPO market spawns 3 new billionaires in under a week

According to Bloomberg, out of the approximately 24 companies that had their debut listing on Chinese exchanges last week, at least 3 of them established new billionaires.

On Monday (24 August), the 18 companies that floated on ChiNext (NASDAQ-like subsidiary of the Shenzhen Stock Exchange) gained an average of 212% by market close. One company in particular, Contec Medical Systems’, had their shares rise more than 10 fold on its market debut. Intraday highs saw an almost 3000% jump (2932% to be exact). The medical equipment company became China’s best performing debutant for over two decades.

Sansure Biotech’s founder, Dai Lizhong also became a billionaire after the stock debuted and surged 156% during Friday morning. The numerous other IPOs that took place during the week also beefed up other fortunes, namely Steven Yang, CEO and founder of Anker Innovations.

These results are largely thanks to the ChiNext’s new trading regulations that allow new shares to rise or fall without any cap during their first week of trading. This diverges from IPOs on Shenzhen’s and Shanghai’s main exchanges, which are limited to a 36% decline and 44% gain on the first day of trading. Many of the newly listed shares did fall later in the week. However, this ought to be a sign of a healthy correction.

Source: Bloomberg

More in the pipeline?

With at least 24 individuals becoming billionaires in the first half of 2020, IPOs have evidently been a source of substantial wealth in China, even amid the pandemic.

For Shanghai and Shenzhen, there are reportedly 25 more companies ready to list over the coming 2 weeks, which will likely add to this burst of wealth creation in China.