Is the IPO of large-cap stocks ending the market feast? Here's the truth behind it
Historically, there have been coincidences between large-scale IPOs and market peaks, deeply rooting the impression that "large-cap stocks peak immediately upon listing." However, do data and logic really support this simple attribution?
As hard tech giants like Changxin Technology and Yangtze Memory Technologies have intensively started listings, large-scale IPOs worth tens of billions have followed one after another, raising market concerns about the impact of large IPOs on the market and triggering a correction.
For a long time, the A-share market has held the belief that "listing large-cap stocks is a turning point," which has become a major emotional concern for investors. However, whether there is an inevitable causal relationship between large IPOs and market trends still needs to be confirmed by data.
This article is based on 25 historical samples of large-scale IPOs each reaching 20 billion yuan in the A-share market, reviews the market performance of different cycles of large IPO listings, analyzes their short-term disturbances and medium- to long-term impacts, clarifies the true logic behind capital siphoning and market fluctuations, dispels one-sided market perceptions, and objectively analyzes the actual impact of this round of concentrated tech company listings on the A-share market.
Historical Review: A Panorama of Large-scale IPOs in the A-Share Market
According to statistics from Securities Times · Data Treasure, as of now, there have been 25 IPOs in the A-share market with a fundraising scale exceeding 20 billion yuan, with Agricultural Bank of China being the largest. On July 15, 2010, Agricultural Bank of China listed on the A-share market, exercising the over-allotment option, ultimately raising as much as 68.529 billion yuan, setting a record for the largest IPO in the A-share market.
The second and third places were PetroChina and China Shenhua. PetroChina, which went public on November 5, 2007, raised 66.8 billion yuan in its initial offering; China Shenhua, which went public on October 9 of the same year, raised 66.582 billion yuan in its IPO. The timing of these two companies was quite unique—both at the historical high of the A-share index in 2007.
Following closely are China Construction Bank (58.05 billion yuan), SMIC (53.23 billion yuan), China Mobile (51.981 billion yuan), China State Construction (50.16 billion yuan), China Telecom (47.904 billion yuan), Industrial and Commercial Bank of China (46.644 billion yuan), and Ping An Insurance (38.87 billion yuan).
Looking at the time distribution, large-scale IPOs in A-share history show clear cluster characteristics: the wave of state-owned enterprise returns from 2006 to 2007 and the tech company IPO peak from 2020 to 2022. Behind this cluster phenomenon lies the market environment, policy direction, and industry cycle of specific periods. From 2006 to 2007, large IPOs mostly focused on traditional pillar industries such as finance and energy, while after 2020, they focused on hard technology fields like semiconductors and communications.
Attribution fallacy: Correlation does not equal causality
In the memories of Chinese investors, PetroChina's IPO was almost synonymous with the "bull market turning point" of 2007. On November 5, 2007, this company, dubbed "Asia's most profitable company," listed on the A-share market at an issue price of 16.7 yuan per share, with its opening price rising directly to 48.62 yuan. On the day of listing, its market capitalization briefly exceeded 8 trillion yuan, making it the largest company in the world at the time.
A coincidence in timing deepened this impression: before PetroChina's listing, on October 16, 2007, the Shanghai Composite hit a historic high of 6,124 points; After PetroChina's listing, the A-shares entered a period of deep adjustment lasting several years. This intuitive timing correlation led many investors to form the superficial perception that "PetroChina's listing ended the bull market."
However, during the same period, several large companies such as China Shenhua, China Construction Bank, and Ping An also went public in a concentrated manner. These companies listed in 2007, reflecting a wave of listings following state-owned enterprise reforms and split-share structure reforms, rather than isolated individual companies. Blaming the market peak entirely on PetroChina's listing ignores the complex market background at the time—the outbreak of the U.S. subprime mortgage crisis, the spread of the global financial crisis, and major global stock indices like the Nasdaq and Nikkei 225 were "halved" after peaking in 2007.
When we set aside individual cases and examine from a broader data perspective, we find that the situation is far more complex than simple causality. First, correlation does not equal causality. The concentration of large IPOs is more the result of overheated market sentiment and ample funds, rather than the sole reason for the market shift. Second, not all large IPOs cause the market to peak. In 2010, Agricultural Bank of China raised 68.529 billion yuan to go public, setting a record for the largest IPO on the A-share market, but at that time the market was in a weak recovery phase after the financial crisis and had not yet reached a clear bull market peak. Another case is SMIC, which raised 53.23 billion yuan and listed on the STAR Market in July 2020. After listing, the A-share market did not immediately peak, but continued to rise in the following months, only reaching a peak in February 2021.
Data Insights: Market Impact Before and After Listing
By systematically reviewing data from 25 large IPOs with over 20 billion yuan in fundraising, we can see a clearer picture.
First, the market often experiences a "warm-up rally" before the issuance. Data shows that in the 20 trading days before the online issuance of large IPOs, most samples and corresponding indices (note: Main Board companies correspond to the Shanghai Composite Index and Shenzhen Component Index, ChiNext and STAR Market companies correspond to the ChiNext Index and STAR 50 Index respectively), with an average increase close to 3%. In the 20 days before China Life's online issuance, the Shanghai Composite Index rose by as much as 18.98%; The most recent significant gain was for SMIC, where the STAR 50 Index surged 18.36% in the 20 days before its online issuance. The driving logic is straightforward: large IPOs themselves are amplifiers of industry signals, and before listing, the market tends to price the related industry chain with expectations rather than panic flight.
Second, both the issuance and listing dates had limited impact. Looking at the performance of the corresponding index on the online issuance day, out of 25 samples, 16 saw increases and 9 fell, with the index rising by about 0.41% on average, without the sharp correction feared by the market. On the day of listing, the situation was slightly different: among 25 samples, 21 saw the index decline, 4 rose, with an average decline of about 1.7%. On the day of SMIC's listing, the STAR 50 Index fell 8.82%, the largest drop among the sample.
Finally, after listing, there is usually a short-term upward recovery rally. From a longer time window, the impact of large IPOs on the index shows a clear pattern of "short-term disturbances and medium- to long-term regressions." Within five days after listing, the 25 samples saw their corresponding indices rise by an average of 0.34%, recovering from the decline. Even SMIC, which had the largest decline, rebounded 1.66% within 5 days of listing and briefly recovered its losses within 12 days of listing. Overall, the market shock on the day large-cap stocks go public is relatively brief, usually completing recovery within 1~2 weeks.
After the implementation of new IPO regulations in 2016, the impact of large IPOs on the market did not materialize, and their overall performance was basically similar to the old regulations. Under the old IPO rules, investors had to pay subscription funds in advance, resulting in huge amounts of funds being frozen. However, even though the new regulations cancel the prepayment mechanism, the market trend still follows a trajectory similar to that of the old regulations. This indicates that the market impact of large IPOs is not closely related to changes in IPO subscription rules.
It should be noted that the last two large-scale STAR Market IPOs—BeiGene and Huahong Hongli—each raised over 20 billion yuan, both experienced significant corrections in the STAR 50 Index within 60 days of listing. However, this phenomenon is more affected by the overall global semiconductor industry downturn rather than a single IPO event. From a global market perspective, the Philadelphia Semiconductor Index fell nearly 36% for the entire year of 2022, and from August to October 2023, it fell for three consecutive months, closely synchronizing its trend with the STAR 50 Index. This indicates that the temporary adjustment of the relevant indices is mainly attributed to downward pressure from the macro industry cycle.
Siphon effect: It exists but should not be overestimated
Overall, the impact of large IPOs on the index follows the pattern of "rising first then falling, short-term pressure, and rapid recovery." Before and on the day of issuance, it often has a certain upward effect on the index; However, in the short term after listing, the index's performance is easily dragged down. However, this negative impact is usually phased, and most markets can self-repair within 1~2 weeks.
The market's most direct concern about large IPOs mainly stems from the capital diversion effect. During the IPO period, large amounts of capital are withdrawn from the secondary market and flow to the primary market to participate in subscriptions, causing a temporary reduction in existing funds and triggering a short-term index correction.
However, in practice, this "siphon effect" has not caused a substantial impact on overall market liquidity. On one hand, the evolution of IPO rules from old to new rules has not changed the underlying logic of how large IPOs affect the market; On the other hand, market trading volume data shows no significant contraction caused by large capital divergence. This indicates that the capital disturbances brought by large IPOs are more about short-term sentiment and liquidity friction rather than trend disruption.
Looking at turnover rate data, the average daily turnover rate of the corresponding index in the 20 days after listing is not significant compared to the month before listing. Based on the average of 25 samples, the average turnover rate of the corresponding index in the 20 days before listing is 2.09%, on the day of issuance it is 2.16%, on the day of listing it is 2.17%, and within 20 days after listing it is 1.95%.
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Before and after the implementation of the new IPO regulations in 2016, the impact of large IPOs on market liquidity showed significant phase-based differences. Data shows that compared to before 2016, the average turnover rate of the corresponding index before and after listing for large IPOs declined more noticeably.
This phenomenon is mainly driven by two factors: on one hand, in recent years, overall market volatility has narrowed and trading sentiment has stabilized; on the other hand, before 2016, most large IPOs were concentrated in bull market cycles, when liquidity was abundant and capital capacity was stronger, which pushed up turnover rates at that time.
Research by GF Securities also proves this. The institution pointed out that, from the perspective of the A-share market, the impact of large IPOs on the overall market after listing is limited. The study analyzed all stocks with total fundraising exceeding 10 billion yuan since 2016 (a total of 20 stocks), and found that the adjustment pressure during bull markets was much less than during bear markets, with only a slight effect reflected within one week. The underlying reason may be that incremental funds were more abundant during bull markets, making the market more resistant to IPO capital diversion. Institutions such as China Merchants Securities also pointed out that since new IPOs on the STAR Market do not require advance payment, the effect of capital diversion is limited and should not be blindly exaggerated.
More importantly, the market liquidity environment determines the severity of the siphon effect. When overall market liquidity is tight, the capital diversion effect brought by new stocks is significantly amplified. In a bull market, incremental funds are abundant and resist capital diversion more strongly. Today, the daily turnover of A-shares has remained at a high level for a long time, and the depth and breadth of the market are no longer comparable to those from over a decade ago.
Driving capital market metabolism with technological upward power
Stepping outside the perspective of capital games and examining with industry thinking, we find that what determines the post-listing performance and industry fate of large-cap stocks has never been the listing bell itself, but the industry cycle and underlying demand. The impact of large-scale IPOs on the capital market is essentially a metabolism—the old allocation structure gives way to new industry centers, and capital flows from inefficient redundancy to strategic bottlenecks.
From a micro perspective, large-scale IPOs do indeed have a certain "siphoning effect" in the short term on similar sectors. Historical data shows that within 20 trading days before and after listings of semiconductor giants like SMIC and Hygon Information, the market value of other companies in the sector often experienced varying degrees of market value corrections. However, this short-term sentiment shock is usually digested by the market within 1~2 weeks, and over a longer cycle, stock prices remain dominated by industry fundamentals.
Take SMIC's listing on the STAR Market in 2020 as an example: at that time, global consumer electronics demand was exploding, and supply chain disruptions caused a "chip shortage wave," putting the semiconductor industry in a typical supply-demand mismatch and price increase cycle. Supported by this strong demand, SMIC not only successfully raised funds to expand production but also drove prosperity throughout the entire A-share semiconductor upstream supply chain, with the rally continuing into mid-2021.
Conversely, when the global semiconductor industry entered a downturn from 2022 to 2023, newly expanded capacity encountered a drop in demand, and related companies' stock prices generally came under pressure. This fully proves that it is industry trends that determine the success or failure of IPOs, not the IPO that ended the industry trend.
Zhongtai Securities also stated that intensive IPOs in hot industries may bring a new round of market performance. The core is not the IPO itself increasing supply, but rather the process of releasing industry information, increasing market attention, and strengthening capital risk appetite.
When facing large-scale IPOs, investors need to abandon black-and-white mindsets and rationally analyze their deeper impact from multiple dimensions. Industry insiders generally believe that the core value of large IPOs for the capital market lies in driving "metabolism"—driving capital from inefficient to efficient fields, enabling high-quality companies to allocate more resources, accelerating the clearing of outdated capacity, and thus promoting the long-term and steady development of the capital market.
The data also confirms this: after listing, the average increase (excluding first-day price changes) of 25 large IPO companies exceeded 100%, bringing substantial returns to secondary market investors. Among them, Industrial and Commercial Bank of China and Agricultural Bank of China saw cumulative gains of over 400%, while hard tech companies like Industrial Fulian and Huahong Hongli each saw gains of over 300%. From a dividend perspective, these large enterprises have maintained stable dividends year-round and are the backbone of the A-share dividend system. Since listing, Industrial and Commercial Bank of China has paid over 1.2 trillion yuan in cumulative dividends, while Agricultural Bank of China, PetroChina, China Shenhua, and Ping An have all paid hundreds of billions of yuan.
Historical experience shows that when the market is extremely excited and the whole nation is buzzing about large-scale IPOs, this itself is a warning and a calm signal to be cautious of. However, if the market peak is simply attributed to a large IPO listing, it may fall into attribution fallacy. Data reveals: Although there is a temporal correlation between large IPOs and market tops, it is not a strict causal relationship. They are more of the "results" of overheated market sentiment and abundant funds, rather than the "causes" of the market shift.
Looking at the present, whether it's the intensive approval by domestic hard tech companies or the opening of super IPO windows for overseas AI giants, both signal the arrival of a new wave of technology. The short-term impulse capital diversion brought by large IPOs is not necessarily negative; what truly determines the medium- to long-term trend is whether new capacity can be effectively absorbed by the continuously growing demand for AI computing power or domestic substitution.
Therefore, one should not stray from fundamentals to chase short-term speculation; only by returning to industry thinking and focusing on high-quality tracks that can convert fundraising into actual production capacity and realize capacity as real results can true core value be grasped amid the tide of the times.
In this round of fundraising by giants like Changxin Technology and Yangtze Memory, they will invest in core technology R&D and capacity expansion, helping the domestic tech industry break through bottlenecks, drive upstream and downstream growth in the industry chain, and inject new growth momentum into the market. This batch of large-scale IPOs is an important milestone in upgrading China's technology industry, accelerating the process of domestic substitution and cultivating a new generation of core assets for the capital market.
Disclaimer: All information on Datatreasure does not constitute investment advice. The stock market carries risks; invest with caution.
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