Behind China’s drought of initial public offerings lies 35 exhausted and overstretched regulators
- Every IPO application involves seven members of the listing committee, and there are more than 200 outstanding applications
A stock market devoid of IPOs is a stagnant pool.
China is in another listing drought, two years after the floodgates of initial public offerings (IPOs) were reopened. So far this year, just 80 companies got the nod from the securities regulator, raising a paltry 15 billion yuan (US$2.2 billion).
Wary that new listings may drain liquidity, the China Securities Regulatory Commission (CSRC) tends to close the IPO pipeline whenever there’s a rout. The A-share market is one of the world’s worst this year, with the benchmark Shanghai Shenzhen CSI 300 Index down more than 20 per cent.
Even if China were having a bull run, though, there weren’t enough newcomers. Last year, 250 companies went public, a fraction of the 3,556 accounting for A shares’ 45 trillion-yuan pool.
The main problem? The securities regulator is short of good people and its staff are exhausted.