Autohome (ATHM), a Chinese online auto site, priced 7.8 million shares at $17 last night, above the raised price talk of $14 to $16, and opened this morning at $30.16.
500.com (WBAI), a sports lottery business, priced 5.8 million shares at $13 ... now trading at $25, up almost 100 percent, a few days after going public.
Sungy Mobile (GOMO), which offers mobile Internet products (app management, for example), priced 5.4 million shares at $12 a few days ago, now trading over $16.
What's going on?
First: massive growth potential. We had the CEO of Autohome on this morning—he said most of the people who visited his site were buying a car for the first time in their lives! Think about that! China has 1.6 billion people. There are hundreds of millions who have never owned a car. Or a watch. Or insurance.
Second: Transparency issues have gone away. Remember all the worries about whether you could believe the numbers coming out of these Chinese companies? What happened to all those worries? As far as I can tell, nothing has changed. Nobody has made any moves to revamp the accounting procedures, or improve transparency. Heck, sometimes you can't even get info on these companies. Some Chinese companies don't even file quarterly reports. It's just that more than a year has passed since it was an issue and everyone has forgotten. Oh sure, there was a brief period of six or seven months earlier this year when Chinese IPOs evaporated here. But that started changing in the second half. China is "out of the penalty box," as one trader said.
Third: Deals doing well spur even more deals. It helps that 500.com and Sungy Mobile have done so well in the past two weeks; it also helps that the markets are holding up so well. There are now 10 Chinese IPOs waiting to go public at the NYSE.
That's something, considering that there have only been seven or eight this year, all of them in the second half of the year. And they have done well, for the most part. The only dog has been LightInTheBox (LITB).
Chinese IPOs this year: Percent change from initial price ...
- 500.com: +101%
- Qunar Cayman Islands: +96%
- 58.com: +74%
- Montage Technology: +67%
- Sungy Mobile: +38%
- China Commercial Credit: +33%
- LightInTheBox: -27%
—By CNBC's Bob Pisani