IPOs and cooling GDP damp investors
Print Edition
Shanghai’s key stock index yesterday tumbled to a nearly five-month low on fears several initial public offerings this month may drain liquidity from the market and also on China’s cooling economy as the service sector expanded at the lowest pace in 28 months.
The Shanghai Composite Index slumped 1.8 percent, or 37.43 points, to 2,045.71.
Eleven companies said in their exchange filings last Sunday that they have regulatory approval to float shares domestically, bringing the total number of companies allowed to launch IPOs to 27.
The China Securities Regulatory Commission said earlier that around 50 companies will be ready to launch IPOs in January, a number that Zhu Haibin, an analyst at Essence Securities, agreed with yesterday.
“The first batch of IPOs is estimated to raise a total of 40 billion yuan (US$6.6 billion),’’ Zhu said. ‘‘This will add pressure on market liquidity in the short term.”
The HSBC China Service Purchasing Managers Index, a gauge of operating conditions in private and export-oriented service companies, fell again in December to 50.9, HSBC Holdings Plc and Markit Economics reported yesterday.
The reading fell from 52.5 in November and was the lowest since August 2011. A reading above 50 indicates expansion.
Poly Real Estate Group Co, China’s second-largest listed developer, fell 5.7 percent to 7.65 yuan. Gemdale Corp slid 4.8 percent to 6.01 yuan. China Enterprise Co slumped 7.9 percent to 6.15 yuan.
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