The daily increase is capped at 10%. All else being equal, in the real world, the only way to limit demand is to raise the price - eventually it will reach it's actual market value. Until then, "demand" doesn't really have much meaning - it's essentially being rationed. What I don't understand is who's selling?
Who's selling? Well, imagine you wanted to sell your $300k ('market value') house on the market, as you needed liquidity. But the government says its price is capped at $25k. They enforce this by only letting notaries sign off on sales at that price.
Ownership of a house by law is only valid once a notary (government worker) signs off on the exchange of the deed, so nobody will buy the house without the notary's signature, as then they'd pay but not officially receive ownership. The seller who has the money, can now call the police and kick the buyer out of the house, as the buyer can't prove he owns the house as he never received the deed from a notary. So to sell, you must use a notary service, and through the notary, $25k is exchanged hands.
Now obviously nobody will sell $300k value at $25k, and obviously there are lots of home owners who at any point in time want liquidity and want to sell the house for whatever reason.
The most sensible thing to me is 1) not many are selling, even if 1 out of a million shares exchanges hands, whatever was the last price is the new price. So the 10% gain can happen with insignificant volume. And 2) some people are selling for $25k, while receiving $275k under the table through a different deal. It'd be discounted as you'd likely need to launder the money which has costs, but if the market price and the artificial price are far enough apart, people will do it.
The selling may be to route around the price restrictions. If the mandated IPO price is $100, and the statutory maximum price change is +/-10% of the previous closing price per day, and the true market price of shares is $10,000.00, the procedure looks like this:
Day 0: Buy 10000 shares at $100.
Day 1: Ask $110.00 for 1 share.
Day 2: Bid $121.00 for 1 share.
Day 3: Ask $133.10 for 1 share.
Day 4: Bid $146.41 for 1 share.
.
.
.
Day 48: Bid $9,701.72 for 1 share.
Day 49: Ask $10,000.00 for 10000 shares.
Day 50: Pay your patron tribute from the $98,994,971.
Day 51: Start converting the remainder into foreign currency.
Following this patient strategy only costs you $5029, which ultimately goes to your trading accomplice, who bought your share on odd-numbered days and sold it back to you on even-numbered days. No black market transactions are required.
You could probably conspire with another party to sell your shares back and forth at +10% every day. That way the official market price of your shares would eventually get to the point where you could share them at their true value.
Given the daily 10% increase, anyone selling would have to be desperate for cash and, simultaneously, a horrifyingly bad risk. A loan at significantly lower than 10% daily interest could probably be secured using the securities as collateral, so I don't think that's the explanation.
