The mainland market for initial public offerings has hit a rough patch, with Beijing SPC Environment Protection Tech getting a record lack of interest from institutional investors.
SPC's 7.6 million new shares earmarked for corporate and institutional investors were only two times oversubscribed, the most lacklustre response in the history of the mainland stock market. It is more used to seeing a buying frenzy among institutional investors over listing shares, which in the past have tended to be dozens of times oversubscribed.
The lukewarm response from investors underscores growing difficulties for companies seeking to raise money on the domestic stock exchanges.
'It shows the IPO market is in trouble amid the weak buying interest,' said TX Investment Consulting analyst Qiu Yanying. 'It also raises questions about whether the regulator should wield its influence in the controversial primary market.'
Before 2009, most newly listed stocks jumped at least 30 per cent on the first day of trading, resulting in 'subscription euphoria' among thousands of institutional and retail investors for each offering.
SPC, which is due to list on the SME board of the Shenzhen Stock Exchange, allocated 20 per cent of its shares to institutions and the rest, or 30.04 million shares, were offered to the public. While the shares were sold, the response bodes ill for the outlook of coming share offerings, analysts said.
The China Securities Regulatory Commission had a final say in the pricing of offerings before 2009, requiring the companies and underwriters to artificially set prices low, a move to help state-owned companies' fund-raising activities.