CSRC clampdown sees first IPO pulled

Following reports about the Chinese regulator getting tougher on IPO candidates, the new measures already seem to be having the desired/feared effect. From Finance Asia today (and probably soon to disappear behind the paywall):

Only a day after China’s securities regulator announced it would closely vet the financial statements of listing hopefuls, companies started withdrawing their applications for new share sales.

Guizhou Zunyi Titanium, a titanium sponge producer, announced on Thursday that it would cancel its long-awaited initial public offering and has received confirmation from regulators on the withdrawal. Zunyi was the first company to scrap its IPO plans and more companies are expected to do the same.

Deloitte said earlier this month that about 20% to 25% of current IPO applicants on the mainland may withdraw or re-consider their listings in 2013. If that estimate is correct, up to 220 companies will cancel A-share IPOs this year, lowering the waiting list to 662 firms — still a big number.

Despite the disquiet of the brokers – who of course benefit from higher numbers of IPOs, regardless of the quality of the company – this is probably a good thing. A shortage of listed companies is not the main problem for the A share market.

Leave a Reply

Your email address will not be published. Required fields are marked *