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Shanghai index falls amid jitters over glut of new shares
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Shanghai stocks slumped in the morning trading amid concerns about a glut of new shares after China’s top securities regulator announced an end to a 13-month moratorium on initial public offerings.
The benchmark Shanghai Composite Index slid 1.7 percent, or 36.62 points, to 2,183.88. Half-day turnover was 101.6 billion (US$16.7 billion).
The China Securities Regulatory Commission on Saturday unveiled a guideline to reform the country’s IPO system toward a registration-based mechanism, pledging to improve market transparency and reducing the role of government in the issuance of 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 able to go public in January.”
China has put on hold on new share listings since November last year in a crackdown on IPO frauds, leaving more than 700 applicants on the waiting list.
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 7.1 percent by midday.
Chengdu B-ray Media Co plunged 9.3 percent to 18.64 yuan. Shantou Dongfeng Printing Co shed 9.2 percent to 22.04 yuan. Dr. Peng Telecom & Media Group Co slumped 5.6 percent to 14.80 yuan.
Brokerages led the gains of financial stocks. China Merchants Securities Co surged 9.8 percent to 12.01 yuan. CITIC Securities, China’s largest broker, gained 3.2 percent to 13.31 yuan. Haitong Securities rose 3.4 percent to 12.16 yuan.
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