CMGE sees zero trading on Nasdaq debut
Updated: 2012-09-26 15:04
By HE WEI in Shanghai (chinadaily.com.cn)
China Mobile Games and Entertainment Group Ltd saw no trading on its debut on the Nasdaq due to a huge bid-ask spread.
Data from the stock exchange showed that the minimum selling price was $40 per share, while the buying price reached only $3.9 per share, a huge gap that resulted in zero trading volume at the close on Tuesday.
The bid-ask pricing equation reflects the different valuations that individual market participants ascribe to a certain stock. In more volatile stocks, bid-ask spreads tend to be wider, indicating the greater range of possible share price valuations, and the lower likelihood of converting the shares to cash easily.
As a listing by way of introduction — which is the case of CMGE's listing — does not necessarily involve financing in the first place, the company might see a shortage of investment during the initial stage.
The situation also highlights the unfavorable climate for Chinese stocks, given recent accounting scandals and ill-intentioned short-sellers.
Zhang Lijun, president of CMGE's parent company VODone, said recently that the listing is primarily targeted at enhancing brand awareness rather than raising funds.