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June 27, 2017

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IPO to slow for market stabilization

INITIAL public offerings will slow down on China’s mainland in the second half with tighter criteria to help stabilize the market amid slower growth and tightening liquidity, Ernst & Young said yesterday.

The number of A-share IPOs quadrupled in the first half from the same period of last year to 246, raising a combined 125.6 billion yuan (US$18.4 billion), the EY Global IPO Market Study Report said.

But a slowdown of IPOs already started in the second quarter when major economic indicators began to moderate and financial regulators tightened policies to accelerate deleveraging.

The China Securities Regulatory Commission rejected 14 percent of IPO applications in the first half, twice that of last year. EY expects the trend of slowing IPOs and higher criteria to continue.

IPO proceeds fell 20 percent in the second quarter from the first quarter and the pace of approvals also declined, which helped stabilize the market to a certain extent, the report said.


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