China’s IPO volume tumbles 70 per cent after CSRC tightens rules to deter new offerings, boost stock markets

by
China’s IPO volume tumbles 70 per cent after CSRC tightens rules to deter new offerings, boost stock markets

China’s initial public offering (IPO) volume has slumped 70 per cent from a year ago after the securities regulator pledged in late August to bolster the sluggish stock market by restricting approvals and slowing down the pace of new-share offerings.

Forty-two companies have raised an aggregate 35.3 billion yuan (US$4.86 billion) via share offerings in mainland China’s three stock exchanges since the China Securities Regulatory Commission’s (CSRC) announcement on August 27, according to Bloomberg data. That compares with the 117.2 billion yuan raised by 105 companies in the same period last year.
In the August announcement, the regulator said it would “tighten the pace of IPOs in stages” to “promote the dynamic balance” between investment and financing.

The tightened pace of new-share sales is part of a package by the CSRC to restore confidence in China’s 9.7 trillion yuan stock market, which is grappling with a slew of negative headlines including decelerating economic growth, foreign investor exodus and rising interest rates globally. Stocks have responded by showing some stability, with the CSI 300 Index rebounding about 3 per cent from a four-year low struck last month. Support has also come in the form of a cut in stamp duties and direct state buying.

People walk past the Shanghai Stock Exchange building in Shanghai, China. Photo: EPA-EFE

“A slower pace of IPOs can to some extent get some of the funds tied up for new-share subscriptions to flow back to the secondary market,” said Fei Xiaoping, an analyst at brokerage Dongguan Securities. “Fewer IPO sales will add to the rarity of new shares and that will improve the market performance and boost liquidity.”

The number of IPO applications handled by the Shanghai, Shenzhen and Beijing exchanges tumbled 90 per cent from the second quarter to 30 in the three-month period ending in September, compared with the previous quarter, Dongguang Securities said in a report. The three bourses also rejected 44 IPOs in the September -October period, it said.

Chinese EV maker Zeekr, unit of Geely, hastens US IPO to expand product line

The biggest IPO to hit the market since CSRC’s restrictions came into effect, was Shanghai Ruking Technologies, an air-conditioning equipment maker that raised 2.35 billion yuan and began trading on the Shenzhen exchange on August 30. That was a fraction of Hua Hong Semiconductor’s 21.2 billion yuan IPO in early August, the most valuable deal on the mainland’s bourses this year.
The slowdown in IPOs means that the launch of some high-profile deals could be further delayed, such as the planned 65 billion yuan flotation of agrichemical giant Syngenta Group. Its mainboard listing was approved by the Shanghai exchange in June, but the exchange, which has a final say on the IPO timing, is yet to determine when it could be launched. The company is expected to start the IPO process by end-2024, according to media reports.
To further reduce the supply of new shares, the Shanghai and Shenzhen exchanges last week imposed new curbs on additional stock offerings and rights offers, barring underperforming listed-companies from raising money.

Administrative interference in mainland China’s IPO market is not a new phenomenon. China has halted IPO sales nine times in its stock market history, to arrest a downtrend. The last moratorium was in 2015 when, following a dramatic boom-to-bust market meltdown, new share sales were suspended for nearly three months.

So far this year, 283 companies have raised 335 billion yuan from IPOs on the mainland China’s exchanges, compared with 590.8 billion yuan for the whole of last year, Bloomberg data shows.

FOLLOW US ON GOOGLE NEWS

Read original article here

Denial of responsibility! Chronicles Live is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – chronicleslive.com. The content will be deleted within 24 hours.

Leave a Comment