Stocks plunge as planned IPOs spark profit-taking
Print Edition
SHANGHAI stocks suffered the worst fall in a month yesterday amid profit-taking that hit the financial sector ahead of new share offers.
The Shanghai Composite Index dropped 2.2 percent to 3,263.05 points after losing 2.56 percent on February 2.
China Securities Regulatory Commission released a list of approvals for the initial public offerings of 24 companies after trading closed on Monday. The IPOs will open for subscriptions next week with 12 to be launched on the Shanghai bourse and the same number on the Shenzhen exchange.
Minsheng Securities said the new IPOs had led to fears among investors over a tightened liquidity.
It is estimated that 2.7 trillion yuan (US$430 billion) will be channeled to the IPOs.
On Saturday, China’s central bank cut the interest rates for the second time in three months as inflation cooled. Huatai Securities said the trim had led to an even weaker Chinese yuan against the US currency.
Huatai Securities dropped 5.44 percent to 21.92 yuan, Haitong Securities lost 4.93 percent to 20.82 yuan, and Southwest Securities shed 4.67 percent to 18.79 yuan.
Among the 24 IPOs, Shanghai-based Orient Securities Co said it plans to raise 10 billion yuan through a share sale on the Shanghai market. Orient Securities plans to sell 1 billion A shares, or up to 18.9 percent of its enlarged equity, to the public, according to the firm’s prospectus released yesterday.
Proceeds from the sale will be used to replenish working capital and expand businesses including wealth management, margin financing and investment banking.
Orient Securities’ debut will raise the number of listed brokerage to 22.
The deal came after Dongxing Securities’ 4.59 billion yuan IPO last month and Guosen Securities’ 7 billion yuan share sale in December.
Orient Securities will set the offering price after talking with investors tomorrow and Friday and will start taking subscriptions next Monday and Tuesday. Everbright Securities is the lead underwriter of the share sale.
Established in 2003, Orient Securities has a registered capital of 4.28 billion yuan and is ranked as China’s 11th-largest brokerage in terms of net asset in 2013.
The brokerage’s net profits rose 140 percent year on year to 2.36 billion yuan last year.
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