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Shares of
Zhong Yang Financial Group
,
a Chinese online broker, soared 240% in its first day as a public company.
Zhong Yang’s (ticker:
TOP
) stock kicked off at $25, up 400% from its offer price. Shares ended Wednesday at $16.99, a gain of $11.99. The company sold five million shares at $5, the bottom of the range of $5 to $6 it had told investors to expect, according to a statement. Univest Securities and Valuable Capital are underwriters on the deal.
Zhong Yang is the latest microcap stock, a group the Securities and Exchange Commission define as companies with market capitalizations of less than $250 million to $300 million, to open for trading in what is turning out to be a quiet year for initial public offerings. Just 43 companies had listed their shares as of May 27, raising about $4.5 billion, according to Dealogic. That compares with 157 companies that listed their shares, collecting $62.1 billion, for the same period in 2021.
Many microcap stocks trade in low volumes, so relatively small transactions can swing the prices. The fact that companies tend to be new, without proven records, adds to the risks.
So far this year, nine microcap stocks have soared more than 100% on their first day, according to Matt Kennedy, senior IPO strategist at Renaissance Capital. All are trading below their first-day close and seven are below their IPO prices, Kennedy said. The nine includes
Ostin Technology Group
(OST), which delivered one of the best first-day pops this year when its stock rocketed about 892% from its $4 IPO price in April. Shares on Wednesday closed up 1% to $2.06.
Genius Group (GNS), an online education company, also soared 408%, to $30.50, in its IPO in April. On Wednesday, the stock shed about 6% to $7.71. Blue Water Vaccines (BWV), a biotech, was considered a standout IPO from the first quarter, when it rose about 540% from its $9 IPO price in February. Blue Water’s stock on Wednesday dropped about 8% to $4.06.
Zhong Yang is a Hong Kong online broker that specializes in the trading of local and foreign equities, futures, and options products. Revenue dropped 63% to $3.2 million for the six months ended Sept. 30. Net income fell 64% to $866,443 for the same period, the prospectus for the deal said.
“[Zhong Yang’s] 300% gain that we’re currently seeing may be given back like the others. It seems to be following the same trading dynamic at least for now,” Kennedy said.
Write to Luisa Beltran at luisa.beltran@dowjones.com
Read More: Zhong Yang Financial Is the Latest Microcap IPO to Pop