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China to restart IPOs as market stabilises: Xinhua

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6 November 2015 06:30 pm - 0     - {{hitsCtrl.values.hits}}

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AFP - China will restart initial public offerings, state-run media reported yesterday, after suspending them in July as part of a rescue package to rein in a rout that wiped trillions of dollars from market capitalisations.
Chinese IPOs usually drain funds away from the stock market as the country’s restrictive IPO system offers guaranteed profits for investors who are lucky enough to secure flotation shares.
The China Securities Regulatory Commission (CSRC) suspended 28 already approved new issues in July, after the Shanghai market plunged from its June peak.
It will restart them this year, with the first 10 to go ahead in two weeks’ time, the Shanghai Securities News quoted a CSRC spokesman as saying.
The CSRC has the power to decide which companies offer shares and when, as well as setting guidelines for the number of shares and their price -- all of which are determined by the market in other countries.

Authorities launched extraordinary measures to contain plunges in recent months, banning stockholders with more than five percent of a listed firm from selling shares, and made interventions costing hundreds of billions of dollars.
An analyst said calm had been restored to the Chinese market, allowing IPOs to resume.
“The CSRC announced this now as the market has stabilised after leveraged funding through outside channels was cleared and investor confidence recovered with the market showing good momentum,” Chen Jiahe, an analyst from Cinda Securities, told AFP.
The benchmark Shanghai index closed up 1.91 percent on Friday, still over 30 percent down from its June peak, but Chen said new share issues will not have major impacts on the market.

“The new shares won’t be issued immediately and the amount of fund used for new shares will be relatively small. Investor confidence has recovered and they may interpret this as a sign of market stabilisation,” Chen said.
The CSRC will also improve the IPO system, said the Shanghai Securities News, which is supervised by the official Xinhua news agency, but without giving details.

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