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CRIEFF Discussion Paper Number 0716

Analysis into IPO Underpricing and Clustering in Hong Kong Equity Market

Yongyuan Qiao

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This paper focuses on the time series properties of the level of underpricing of IPO shares and volume of initial selling in Hong Kong equity market. Strong autocorrelation among the level of underpricing has been identified. Evidence suggests that the initial selling volume plays an important role in the relationship. The links between underpricing and clustering of IPOs within different industries are weak, suggesting the reasons for underpricing are rather related to the market liquidity than industry specific risk characteristics.

JEL codes: G14, G11, G24, G32

Keywords: Underpricing of IPO shares, Hong Kong equity market, the volume of initial selling, Market liquidity