Stocks end down ahead of IPO floats
Print Edition
SHANGHAI stocks ended lower yesterday amid concerns that new-share sales will drain funds away from the existing shares. The benchmark Shanghai Composite Index lost 0.22 percent to 2,054.48 points.
“The shrinking turnover suggests that investors took a cautious stance ahead of the second batch of initial public offerings,” said Shenyin & Wanguo Securities.
Eleven of the 12 companies that have received approvals by the regulator to go public will start to take subscriptions tomorrow and on Thursday with the aim of raising 5.83 billion yuan (US$940 million).
A Haitong Securities report said new offerings are expected to lock in 910 billion yuan in funds even by conservative estimates. “Enthusiasm for IPOs is running high because new shares tend to come at lower prices on new IPO rules,” the report claimed. “Intensive IPOs will impact market liquidity and weigh on the market.”
The composite index dropped 2.13 percent during the week of June 16 to 20 when six of the first batch of IPOs opened for subscriptions.
Analysts with Dongguan Securities said the market is expected to fluctuate in the short term on positive factors like reforms of state enterprises and a recovering economy.
China Petroleum & Chemical fell 1.6 percent to 4.89 yuan. PetroChina lost 0.7 percent to 7.50 yuan.
China Eastern Airlines lost 1.3 percent to 2.34 yuan after the company forecasted a net profit of 50 million yuan for the first half of the year, a decline from 763 million yuan in the same period last year.
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