What?s Wrong with Chinese IPOs
Another wave of Chinese IPOs is hitting the US equity market, but this time many US investors are staying dry. The reasons for this growing aversion are several, but paramount among them are evidence of actual fraud at a handful of companies. As a result, Chinese IPOs have been one of the worst performing groups in the US IPO market, which furthers investor avoidance of the sector. If an investor bought every Chinese IPO since 2008, the average return though mid June would have been a -24% loss, compared to a 25% gain on the average non-Chinese IPO.