Return Forecasting and Risk Analysis of Purchasing New Issues in Chinese Primary Market Based on Simulation

Based on simulation, we research the return and risk of purchasing new issues in Chinese primary market. The major conclusions of the paper are listed below: (1) an investor can make more profit if he sells a new issue at closing price rather than opening price on its first trading day; (2) purchasing a new issue in the primary market can get no-risk return in general; (3) we get the fact that the rate of successfully purchasing a new issue in the primary market plays more important role in return than percentage increase on first trading day by sensitivity analysis.