Three IPO candidates rejected

PUBLISHED : Friday, 04 November, 2011, 12:00am
UPDATED : Friday, 04 November, 2011, 12:00am


China's securities regulator rejected three initial public offering applications after a top-level reshuffle, a sign of the new chairman's harsh stance on listing prospects amid the weak sentiment.

The China Securities Regulatory Commission said three out of four IPO applications failed to pass through hearings on Wednesday.

The tightened reviews on listing applicants took place just four days after Beijing appointed Guo Shuqing, the former chairman of China Construction Bank, as new chief of the securities regulator, replacing Shang Fulin.

It was a rare move by the commission to kill three IPOs in a single day.

The regulator did not elaborate on why the three companies - Puyang Willing Chemicals, Anhui Guangxin Agrochemical and Shenzhen Fairyfair Fashions - failed to receive a go-ahead from the review committee.

The CSRC could not be reached for comment yesterday.

Chengdu Lijun Industrial was the only firm given a green light to float 41 million new shares, expected to raise 400 million yuan (HK$485.3 million) on the Shenzhen Stock Exchange.

Beijing announced the reshuffle of the top bosses in the banking, securities and insurance regulators last Saturday. And investors are waiting for any new policy changes by Guo after the market fell 12 per cent this year following a 14.3 per cent drop in 2010.

An IPO bonanza was blamed for the market slide when Beijing tightened monetary policies, causing a liquidity drain. The mainland's IPO market remained strong this year despite a sharp downturn. In the first 10 months of this year, 200 IPOs flooded the Shanghai and Shenzhen exchanges, raising more than 240 billion yuan.

Two large IPOs by Shaanxi Coal Industry and China Communications Construction received approvals.

Shaanxi Coal Industry plans to raise more than 17 billion yuan, while China Communications Construction eyes more than 20 billion yuan.

Investors were venting their anger toward Shang and the CSRC before the reshuffle was announced.

'The rejections of three IPOs could be read as a message by Guo that the regulator is concerned about investors' interests,' Dazhong Insurance fund manager Wu Kan said.

The benchmark Shanghai Composite Index edged up 0.16 per cent to 2,508.09 yesterday.

New China Life Insurance, the mainland's third-largest life insurer that planned to launch a 40 billion yuan dual Shanghai-Hong Kong IPO this year would have to delay its listing, analysts said.