Biggest IPO of the Year Sags to New Low

Jon Blogosphere, Government, Market Commentary

What the heck’s wrong with the IPO market? Hot air keeps hissing out of it.
Shares of parcel-delivery company ZTO Express dropped another 4.9% today on the New York Stock Exchange and closed at a new all-time low of $15.20. The previous all-time low had been obtained the day it went public on October 27: it plunged 15% from its IPO price of $19.50. The IPO had raised $1.4 billion, the largest US IPO of 2016.
It is now down 22% from its IPO price. The company is based in Shanghai and doing all its business in China. Why did it go public on the NYSE? We assume because that’s where the money is.
And because of its toxic dual-class share structure – illegal in China – that give founder Lai Meisong 80% voting power in the company. The shares traded on the NYSE are not actually shares of the Chinese company but shares of a ‘variable-interest entity’ set up in the Cayman Islands, which is contractually entitled to the profit of the Chinese company.

This post was published at Wolf Street on November 4, 2016.