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Effects of Canceling the Policy of 44% Limitation on the First Day of Chinese Stock Market
- 1 Beijing Normal University-Hong Kong Baptist University United International College
* Author to whom correspondence should be addressed.
Abstract
The 44% limitation policy has long been a subject that has attracted researchers from a diverse range of fields including corporate finance, economics, and the stock market since it caused a couple of effects on the Chinese stock market and reflected the major buyers of stocks. To be more specific, most of the buyers are investment banks, in other words, retail investors have less probability to buy stocks on the first day. In this work, new thinking is proposed to analyze the canceling of this policy. Using the data collected from csmar (China Stock Market and Accounting Research Database), this paper compares the turnover rate and stock gains on the first day of the STAR (Science and Technology Innovation Board) market and the A-share market to figure out who are the major buyers, and at the same time, analyzes whether the investments in the STAR market is reasonable under this policy. To conclude, canceling the policy of 44% limitation of stock gains is effective. It is able to diminish the monopoly of the investment bank. Besides, retail investors are allowed to have more chances to buy the stock on the first day, which means the investment circumstance becomes more balanced.
Keywords
star market, origin, 44% limitation, effect
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Cite this article
Shi,S. (2023). Effects of Canceling the Policy of 44% Limitation on the First Day of Chinese Stock Market. Advances in Economics, Management and Political Sciences,12,51-56.
Data availability
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
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