Advanced Search

Related News

Home » Business » Finance

Shanghai market retreats over specter of glut in new shares

By Ye Zhen | December 2, 2013, Monday | Online Edition

Shanghai stocks slumped today as small-cap companies followed their peers on Shenzhen market in record decline amid concerns that ending a 13-month hiatus in initial public offerings may lead to a glut of new shares.

The benchmark Shanghai Composite Index slid 0.6 percent, or 13.13 points, to 2,207.37. Turnover was 151.9 billion yuan (US$24.9) at the trading close.

The China Securities Regulatory Commission on Saturday unveiled a guideline to reform the country’s shady 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 ready to go public in January.”

China put on hold new share listings last November to crack down on IPO frauds, leaving more than 763 applicants on the waiting list as of last Thursday.

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 today, the biggest single-day slump since the board was launched in October 2009.

“The shift to a registration-based IPO system will lead to a surge in new share offerings next year,” the UBS Securities said in a note today.

The ChiNext, which is overvalued compared with its international peers, will be hard hit when 43 of the 83 companies that passed regulatory scrutiny are listed on the board, said the broker.

The ChiNext Index increased more than 90 percent this year before today’s tumble that far outpaced the 3 percent decline of CSI300 which tracks large-cap firms on Shanghai and Shenzhen bourses.

First Tractor Co Ltd plunged by the daily limit of 10 percent to 9.35 yuan. Dr. Peng Telecom & Media Group Co fell 8.3 percent to 14.38 yuan. Aerospace Communications Holdings Co declined 9.8 percent to 13.60 yuan.

Brokerages thrived on the IPO reform. 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 with Orient Securities, said the resumption of IPO is expected to boost brokerages’ investment in banking businesses by 100 percent next year.

Finance


 

Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend