Concerns over glut of IPOs send key index lower
Print Edition
Shanghai stocks fell yesterday as small-cap companies slumped following a record decline by their peers on the Shenzhen market as investors worried that an end to a 13-month moratorium on initial public offerings will lead to a glut of new shares.
The Shanghai Composite Index slid 0.6 percent, or 13.13 points, to 2,207.37.
The China Securities Regulatory Commission on Saturday unveiled a guideline to reform the IPO system toward a registration-based platform as it pledged to improve market transparency and easing the governments’ role in issuing new shares.
“Preparation will take about a month before companies can complete required procedures,” the CSRC said on its website. “We estimate about 50 companies will be ready to go public in January.”
As of last Thursday, there were over 763 applicants on the waiting list.
UBS Securities said in a note yesterday the “shift to a registration-based IPO system will lead to a surge in new share offerings next year.”
Small-cap firms led the decline, tracking their peers on the Shenzhen bourse which sent the ChiNext Index, a gauge of China’s Nasdaq-style board of growth firms, down 8.3 percent yesterday, the biggest single-day slump since the board was launched in October 2009.
First Tractor Co Ltd plunged by the daily limit of 10 percent to 9.35 yuan. Dr Peng Telecom & Media Group Co slumped 8.3 percent to 14.38 yuan and Aerospace Communications Holdings Co shed 9.8 percent to 13.60 yuan.
Brokerages, however, rose. China Merchants Securities Co surged 10 percent to 12.03 yuan. CITIC Securities, China’s largest broker, gained 5.1 percent to 13.56 yuan. Haitong Securities rose 5.5 percent to 12.41 yuan.
Wang Mingfei, analyst at Orient Securities, said the IPO restart is set to boost brokerages’ investment banking business by 100 percent annually in 2014.
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