ChiNext IPO firms in talks on share prices
Eight small companies started initial public offering price consultations yesterday, expecting to raise a combined 1.65 billion yuan (HK$1.87 billion) on the mainland's Nasdaq-style market.
The securities regulator is fast-tracking new share listings in an attempt to cool the second board.
The ChiNext start-up board will be home to 50 listed firms soon after the eight new flotations, along with six others that conducted online offerings on December 25, make their trading debuts.
'It will take a few months for the regulator to successfully curb irrational buying on the second board,' said Essence Securities analyst Liu Jun. 'More IPOs will help siphon some speculative funds surrounding the existing stocks.'
Beijing officially launched the long-heralded growth market at the Shenzhen Stock Exchange in late October.
The first batch of 28 debutants jumped almost 76 per cent from their offer prices on October 30 when they started trading.
The second group of eight firms listed on the growth market posted an average first-day gain of 45 per cent.
As of yesterday, the 36 companies traded an average 104.4 times their earnings last year. Analysts said most firms were overvalued and the buying binge prompted the China Securities Regulatory Commission to approve more listings, hoping to drag down prices of the existing stocks.
The Shenzhen exchange recently warned retail investors of the huge risks in chasing first-day rallies.
It said investors who followed up buying stocks after they had climbed more than 100 per cent from their offer prices on the first trading day all lost money or had paper losses.
To date, 10.7 million mainland investors had opened accounts to trade stocks on ChiNext while 35.6 million have already bought shares on the market.
The Shenzhen bourse said most players on the second board were small investors since 85.15 per cent of them had less than 100,000 yuan of assets in their brokerage accounts.
Many mainland investors believe all the start-ups on the ChiNext will become future profit stars regardless of their elevated prices.
Among the eight firms about to list, Beijing Hiconics Technology plans to raise 331.7 million yuan by floating 30 million shares. Its listing proceeds will be the biggest among the eight.
Shenzhen Sunwin Intelligent looks to net 120 million yuan by offering 13.2 million shares, the smallest in terms of amount.