CSRC speeds up vetting of IPOs to boost market
Beijing has shortened the period for processing listing applications and is likely to approve hundreds of companies seeking to raise capital on the slumbering stock market this year.
The China Securities Regulatory Commission reduced the review period to six months, fast-tracking approvals for about 400 applications, three investment bankers and fund managers said.
Normally, it would take at least a year before an initial public offering could be approved.
The CSRC could not be reached for comment yesterday.
'The process apparently became faster since the regulator reiterated it would cut red tape in IPO approvals,' said an investment banker with Guosen Securities who asked not to be identified. 'The market is set to see a record number of IPOs this year.'
The mainland was the world's largest initial public offering market last year with a record 349 companies raising a combined 478.3 billion yuan (HK$569.5 billion) on the Shanghai and Shenzhen stock exchanges. In the first three months of this year, 89 firms raised a combined US$15.84 billion. The amount accounted for 49.9 per cent of the global total in the same period, according to fund consultancy Zero2IPO.
The CSRC has the final say in companies' listing plans.
The regulator has been using the approval process as a way to intervene in the volatile stock market. It would fast-track approvals to bring fresh equity to an overheated market and would slow down or suspend applications to bolster a weak market.
The faster review process amid the present slumbering market showed Beijing's determination to give more small firms access to funds.
'The government hopes more companies will obtain capital from the capital markets because the real economy is short of fresh capital after the end of the four trillion yuan stimulus package,' said Ray Lu, a manager at Hotung Ventures.
'The problem is that more bad companies will eventually list shares because of the regulator's oversight.'
The Shanghai Composite Index dropped 14.3 per cent last year and was the world's third-worst performing indicator.
The market remained weak this year as investors feared further monetary tightening. The market fell 1.51 per cent yesterday.
Beijing unveiled the four trillion yuan stimulus package in late 2008 to combat a global slowdown. It started to tighten monetary policies last year amid stubborn inflation.
Cash-hungry companies flocked to the stock market for much-needed growth capital after banks tightened loan approvals.
