China’s stock market regulator has clamped down on the newly reopened initial public offerings market, highlighting fears about fragile investor confidence and dealing a blow to hopes for a market-driven future.
Six groups have pulled listings days after the first new share sales in more than a year took place. Five of the companies, which pulled their deals yesterday, cited Sunday’s statement from the regulator that it would strengthen the supervision of IPOs.
The China Securities Regulatory Commission banned listings for more than a year in November 2012 and worked on redrawing the rules of the market after the Shanghai Composite had dropped almost 40 per cent in two years.
The CSRC announced the reopening of the market at the start of December, saying it would relinquish control of large parts of the process such as choosing which companies could list and demanding to know where their shares would price and who would buy them.
The Shanghai market has dropped 11 per cent since then.
Sunday’s “statement No.?4” from the regulator showed that it was still nervous that companies and their brokers would be too aggressive in pricing and selling their deals, bankers said.
“The CSRC is going to make absolutely sure that new IPOs are not going to hurt the market,” said one senior Hong Kong-based banker. “They will try and ensure that everyone proceeds extremely cautiously.”
The move is a setback for those who believed that the CSRC would keep its promise to let investors decide what companies were listed at what price.
However, the regulator was always going to retain some control by having a veto on proposed listings and setting rules to stop excessively high pricing of share issues.
The CSRC said it would pay particular attention to companies that were valued higher than their listed peers and would carry out spot checks on all company roadshows to make sure there was no extra or selective disclosure of information not in preliminary prospectuses.
If a company wanted to list new shares with a price-to-earnings ratio that was higher than those of their listed peers, that company and its underwriters would have to publish weekly announcements and warnings of investment risk for at least three weeks before opening online subscriptions, the CSRC said.
The regulator had given the go-ahead to 11 IPOs by January 2, including Shaanxi Coal and Chemical Industry Group, which is set to raise about $1.6bn, the largest of the bunch.
But Aosaikang Pharmaceutical postponed its Rmb4bn ($662m) IPO on Friday evening after pricing the shares significantly higher than the industry average.
The CSRC denied that it had a hand in the company’s decision, according to Shanghai Securities News, a state-run media outlet.
The five other companies that pulled their deals yesterday, citing the new rules, were NetPosa Technologies, Hebei Huijin Electro-mechanical, Nsfocus Information Technology, Beijing Forever Technology and Ciming Health Checkup.
Additional reporting by Julie Zhu
中国证监会曾在1月2日批准11家公司进行IPO，其中上市规模最大的是陕西煤业化工集团(Shaanxi Coal and Chemical Industry Group)，该公司有望筹资大约16亿美元。
昨日以新规则为由取消上市的5家公司是：北京东方网力科技(NetPosa Technologies)、河北汇金机电(Hebei Huijin Electro-mechanical)、绿盟科技(Nsfocus Information Technology)、北京恒华伟业科技(Beijing Forever Technology)和慈铭健康体检(Ciming Health Checkup)。