A trend towards being normal: the 'A' share experience on the Shanghai stock exchange

The 'A' Share IPOs in China exhibited the highest short-term returns compared to IPOs around the world and the returns have revealed a downward trend towards a norm. Possible reasons for the highest returns include excess demand for new shares, underwriter's strong risk aversion and extremely long institutional lags. Rapid growth in IPOs accommodating the excess demand for new shares, decreasing and now normal institutional lags, lower rates of inflation, lower risk in the stock market and investors' experienced investment behaviour may partially explain the downward trend toward a norm.