Latest News:  
Beijing   Sunny/Cloudy    30 / 22 ℃  City Forecast

English>>China Business

Slowdown seen in IPO approval rate

By Wang Xinyuan (Global Times)

09:00, August 13, 2012

China's capital market regulator had disclosed no pre-IPO information for 27 consecutive days as of Sunday, and its review board had approved no new IPOs for 12 consecutive days, reinforcing market speculation that the regulator is deliberately slowing down new listings in order to revive the sagging market.

China Securities Regulatory Commission (CSRC)'s last review and approval meeting for IPOs was held on July 31, and information about applicant companies has not been disclosed since July 17, according to the CSRC's official website.

The CSRC had been disclosing applicant companies' prospectuses almost every week since the end of October 2011 when Guo Shuqing, former chairman of China Construction Bank, took over as chairman of the CSRC and pushed forward a series of reforms of the capital market.

The CSRC was not immediately available for comment Sunday.

Even though the CSRC said on July 13 that it would not interfere with the market by slowing down IPO approvals, many have speculated that the recent inactivity indicates the regulator's intention to stabilize the market.

China's A-share market had been falling steadily since early May until edging up slightly at the beginning of August. The benchmark Shanghai Composite Index fell to 2103.63 points on July 31, a three and a half-years low.

Many retail investors believe that an oversupply of new stocks in a faltering market is to blame for the poor performance. Nearly 10,000 retail investors initiated an online petition on July 17, asking the regulator to stop approving so many IPOs.

But a suspension of IPO is inconsistent with the market-driven reform that the regulator has been striving for, Li Yongsen, a finance professor with Renmin University of China, told the Global Times Sunday.

Unlike in other more mature stock exchanges, companies need to queue up for the regulator's review and approval procedures in order to get listed on China's A-share market.

Due to the relatively slow procedure, "few companies would postpone or quit their IPOs, even amid a sluggish market, as they want to get as much financing as they can," Xu Guangfu, a strategy analyst with Xiang Cai Securities, told the Global Times.

China's A-share market has long been policy-oriented, meaning that investors often count on the regulator to come up with measures to boost the market whenever it slows down, Xu said.

The CSRC has suspended new listings in the past, including just after a sudden plunge in the market following the global financial crisis in April 2008; it did not resume approving IPOs until June 2010.

"But whether the slowdown in IPO approval is a measure to stabilize the market and how positively it will affect the market is yet to be seen," said Li of Renmin University of China.

News we recommend:
Has the bear outstayed his welcome? Steel profits continue to suffer China has entered an era of low consumer prices
Lamborghini sees 20-30% rise in supercar sales Ad campaigns are competing hard in London Major lenders broaden horizons and flex financial muscles
US takes trade remedy actions against China  Chinese prefer foreign brands Mascot maker feels pinch of rising labor costs


Leave your comment0 comments

  1. Name


Selections for you

  1. China's aircraft carrier's sea trials

  2. Tragic moments all around the world

  3. Why have people lost trust in data and indices?

  4. Yi ethnic group celebrate Torch Festival

  5. Fantastic "rainbows"

  6. Valentino Resort 2013

Most Popular


  1. Money chase likely to continue in U.S. eletions
  2. Real estate rebounds as buyers return
  3. Editorial: Outbound investment risks
  4. Don’t be overwhelmed by domestic issues
  5. US pushes China to get serious about sanctions
  6. Obama diverts attention with Romney bashing
  7. Fearing others' rise offers path to eventual doom

What's happening in China

Poyang Lake rises higher than alert level

  1. Robbery suspect was 'well-behaved'
  2. Ancient villages welcome investors
  3. Fugitive gunman kills police officer
  4. 6.2-magnitude quake hits Xinjiang
  5. Hyundai Motor recall excludes China

China Features

  1. Boxing in China II: A Tale of Two Decades
  2. Fortune 500 Chinese companies not strong
  3. Why Hollywood favores China's actresses?
  4. Dongfeng Honda to recall 76,000 CR-Vs
  5. How to protect yourself during heavy rainstorms?

PD Online Data

  1. Spring Festival
  2. Chinese ethnic odyssey
  3. Yangge in Shaanxi
  4. Gaoqiao in Northern China
  5. The drum dance in Ansai