Article ID Journal Published Year Pages File Type
973277 Pacific-Basin Finance Journal 2006 17 Pages PDF
Abstract
This paper examines the Hong Kong IPO market from August 1995 to July 1999 and finds that the time of the June 30 1997 political handover coincides with the transition in the IPO market from 'hot' to 'cold'. Although the handover was an anticipated event, an explanation for the change in market is that the political handover created uncertainty among investors; a type of information asymmetry where all investors faced greater uncertainty. Our finding provides empirical support to literature which proposes that events in the months preceding the October 27 1997 correction in Asian stock markets facilitated a decline in confidence in financial markets, subsequently characterised as the 'Asia Financial Crisis'. In addition, we find initial returns of newly listed stocks in the Hong Kong market are associated with market condition but not associated with any particular industry (i.e., PROPERTY) or geographic location (i.e., 'H' SHARES) suggesting that the prevailing market condition was spread more generally across issues.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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