China Center Chart Dive: Chinese IPO Pops—Harder, Better, Faster, Stronger

IPO shares often undergo an initial "pop" when first launched as investors bid up prices to acquire a piece of the newly listed company. These are typically contrived events, engineered by investment banks to attract the attention of potential buyers, but they can also be the result of exogenous factors. In more developed markets, these large price increases tend to wane after a few days of trading as investors quickly determine the appropriate value for the new company.

China’s IPO market has a reputation for being especially hot, however, and it is common for new listings to see pops that have gone on for days, or in 2016, even weeks. The drivers of this year’s frenzy appear to be related to a number of institutional factors implemented by the government.