IPO waves in China and Hong Kong

- We analyze the anatomy of IPO waves in China and Hong Kong.
- No significant lead-lag relationship is observed between initial returns and volume.
- In Hong Kong, IPO volume is sensitive to changes in market conditions.
- Chinese IPO activity is much less responsive to past market returns and volatility.
- Regulatory choices lead to formation of hot markets in China.

We analyze the anatomy of IPO waves in China and Hong Kong and draw comparisons with the US IPO cycles. The lead-lag relationship between IPO initial returns and IPO volume observed in the US is absent in these two Asian markets. Similar to the US, IPO volume in Hong Kong is sensitive to changes in market conditions and exhibits seasonal variations. In sharp contrast, however, Chinese IPO activity is much less responsive to past market returns and volatility. Surprisingly, hot markets still emerge in China, not because of market forces as in the US and Hong Kong, but due to regulatory choices.