China: Shares in broker Guotai Junan jump 44%

<p>This is China’s biggest IPO since 2010.</p>

China’s third-biggest brokerage, Guotai Junan Securities Co, has seen its shares jump 44 per cent today (June 26th) in Shanghai after it raised 30.1 billion yuan (£3 billion). This is the country’s largest initial public offering in five years, according to Reuters.

Shares in the company jumped to 28.38 yuan today, compared to their IPO price of 19.71 yuan.

The company told Reuters it plans to use the funds to expand the financial services it provides, improve its underwriting capabilities and broaden its asset management business.

The performance of the stock reflects the “herd mentality” of Chinese investors, Francis Lun, chief executive officer of Hong Kong brokerage Geo Securities, told CNBC. “That’s typical of Chinese markets. You have an issue and everybody jumps on it.”

These good results come as the Shanghai Composite Index tumbled 7.4 per cent to 4193.64 today, as a growing number of analysts warn that valuations have climbed too far.

The slide in Chinese shares is also blamed on fresh government moves to tighten rules for margin financing.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.