China’s new IPO rules will attract listings by fast-growing tech companies, spark bull run in stocks, analysts say

Listing requirements such as revenue and profits have been eased to pave the way for companies from fledging industries

The new registration system will ‘be the driver of a long-term bull run for the A-share [onshore] market,’ securities analyst says

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Companies selling shares on the Shanghai and Shenzhen stock exchanges will for the first time be given the freedom to price their shares based on market demand. Photo: EPA-EFE

Published: 4:00pm, 21 Feb 2023Updated: 4:21pm, 21 Feb 2023

Sweeping changes to the rules governing initial public offerings (IPOs) in mainland China will attract listings by the nation’s fastest-growing companies and cut the time it takes to weed out ones that are unqualified to list, analysts say.

Companies selling shares on the Shanghai and Shenzhen stock exchanges will for the first time be given the freedom to price their shares based on market demand. Listing requirements such as revenue and profits have been eased to pave the way for companies from fledging industries.

The changes, which came into effect on Friday, mark the full implementation of a new registration system that has been tested on small offerings for the last three years.

The new system sees China’s securities regulator relinquish its role in reviewing IPOs, transferring the vetting power to the stock exchanges.

“It’s an important milestone in the reforms of China’s capital market,” said Huang Hongwei, an analyst at Chasing Securities in Shanghai. “More high-quality leading tech companies will get listed here and Chinese companies trading overseas will return.

“All these will be the driver of a long-term bull run for the A-share [onshore] market.”