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Restart of A-share IPOs may be postponed: E&Y

By Liang Fei (Global Times)

11:01, June 28, 2013

The return of IPOs to stock markets on the Chinese mainland may be delayed again as equity benchmarks continue to languish near multi-year lows, yet new listings are expected before the end of the year, two Ernst & Young senior partners said at a press conference Thursday.

A-share IPOs have been on hold since October 2012. The China Securities Regulatory Commission (CSRC) has yet to announce when the moratorium will lift, although Yao Gang, the commission's vice chairman, reportedly said last month that it was "almost certain" IPOs would return at the end of July.

The CSRC later denied these reports, saying it had no specific timeline for relaunch.

"Volatile market conditions are a major reason why A-share IPOs will not restart in July," Terence Ho, Ernst & Young's China Strategic Growth Markets Leader, said at a press conference in Beijing Thursday.

On June 25, the Shanghai Composite Index bottomed out at an intraday low of 1,849.65, a low not reached by the index since January 2009.

Ho noted that the market has been preparing for new listings, and the second half of this year should see new companies secure regulatory approval on their IPOs.

Hoffman Cheong, Assurance Leader China North at Ernst & Young, said also that new IPOs would come mostly from small- and medium-sized companies in the industrial and information technology sectors.

Ho went on to remark that large scale issuances - such as Shaanxi Coal Industry Co Ltd's planned IPO bid, which is expected to raise up to 17.25 billion yuan ($2.8 billion) on the Shanghai Stock Exchange - are unlikely to be seen over the months ahead.

The Ernst & Young representatives added that same companies may pursue listings in Hong Kong as the A-share market remains locked up in regulatory deep freeze.

Over the first six months, 21 companies landed on the Hong Kong stock market, down 32 percent year-on-year, according to a report released Thursday by Ernst & Young. These companies raised a total of HK$39 billion ($5.03 billion) from their offerings, data from this report show.

In the first half, only one mainland firm successfully landed on the US stock market. LightInTheBox floated on the New York Stock Exchange in June, raising $86.25 million.

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