China to resume IPOs after yearlong hiatus
December 3, 2013, 12:08 am TWN
SHANGHAI -- New share offerings will resume in China as early as next month, the country's stock regulator said, ending a ban in place for more than a year, after leaders vowed to give private firms a bigger role in the economy.
There are 760 firms lined up for initial public offerings (IPO) in the world's second-largest economy, and about 50 are expected to go to market by the end of January, the China Securities Regulatory Commission (CSRC) said.
Despite a decades-long boom that was triggered by the loosening of state restrictions, China's Communist authorities retain strong controls over much of the economy, including the power to decide which firms can launch IPOs and when.
However, the CSRC issued new guidelines at the weekend to give the market a bigger role in the listing mechanism.
The move was in line with a document issued two weeks ago after a key Communist Party meeting at which Beijing vowed to let market forces play a more “decisive role” in its economic reforms.
China suspended approvals for new IPOs in November last year, just before the country's once-in-a-decade leadership transition, in an effort to stabilize the ailing stock market.
On Monday stocks tumbled in morning trade owing to worries about the imminent relaunch, with the Shanghai Composite Index down 1.65 percent at 2,183.88 by the break.
The guidelines “sparked worries that a flood of IPOs could divert funds from the secondary market,” Zheshang Securities analyst Zhang Yanbing told AFP, but added that they “should be positive to the market in the long run.”
Instead of focusing on firms' profitability, the CSRC said it will focus on whether they can meet requirements for information disclosure and let investors and the market assess the value and risks of the IPOs.