CSRC's rethink on IPOs flags go-slow approach

PUBLISHED : Thursday, 17 April, 2014, 1:09am
UPDATED : Thursday, 17 April, 2014, 4:57am

The mainland's securities regulator yesterday made an about-turn on initial public offerings in an attempt to slow the influx of fresh equity into an already weak stock market.

The China Securities Regulatory Commission said it would restart vetting listing applications "a bit later than expected". The statement came a day after it said it decided to hold hearings as early as next week.

Beijing reopened the mainland's listings market in January after a 14-month hiatus, but cleared only those companies that passed its approval procedure before October 2012. The listings review committee has yet to vet new listing applications from about 700 companies waiting to float A shares.

On Tuesday, the CSRC ordered all investment banks to submit revised listing documents for reviews by the weekend, sources said.

The official Shanghai Securities News reported yesterday that the review committee would restart vetting applications sooner rather than later. Investment bankers had predicted that the hearings would take place as early as next week.

"(The CSRC statement) is a message that the regulator would take a go-slow approach on new share offerings," West China Securities trader Wei Wei said. "Retail investors are fed up and many of them would choose to cash out when the new fundraising deals hit the market."

The mainland was the world's largest listings market in 2010 and 2011, when a raft of offerings drained liquidity out of existing holdings.

But the benchmark A-share index has been among the world's worst-performing indicators in the past four years amid a crisis of confidence. The regulator halted listings in October 2012 to bolster investor confidence, which made little difference to the ailing market.

The CSRC resumed flotations at the start of this year due to increasing financing demand from firms. But it later forced a batch of them to suspend fundraising as steep offering prices and large share volumes angered investors.

The CSRC said last year that it would reform the mechanism, embarking on a new system based on full information disclosure by listing applicants.

Under the system, investors will be given the power to decide the worth of listing candidates. But the new system will not be implemented when the CSRC restarts reviewing listings this year.

The current market talk is that new listings hearings will not be held until May.