China may slow up on IPOs amid waning investor interest

[BEIJING] China moved to calm market concerns about recent heavy equity issuance amid signs investors are losing interest.

The country's stock watchdog won't adopt a "Great Leap Forward" approach to intensively grant approvals for initial public offerings, the China Securities Journal said Sunday, citing a source close to the regulator, the China Securities Regulatory Commission. The report added the agency will approve future proposed IPOs at a "steady" pace and according to market conditions.

Several other state media outlets echoed the report on Monday, including the Shanghai Securities News and Securities Times. They mentioned the CSRC will look to limit risks in the IPO market.

The published comments follow a flurry of recent IPOs that have seen quick price pullbacks on the stock market. Investor demand to participate has also cooled, with the country's biggest stock listing since 2010 drawing the smallest oversubscription rate from retail investors for a Chinese IPO in almost half a decade.

"The media reports show the regulator aims to strike a balance between deepening reforms and the affordability of the secondary market," said Fu Lichun, analyst at Northeast Securities Co.

The stories, he added, hint that the CSRC "will pay more attention to controlling risks associated with IPOs and may put stricter requirements on the quality of listing candidates".

As of Friday, 174 companies went public in China this year, raising a combined 202.7 billion yuan (S$40 billion), according to data compiled by Bloomberg. That's nearly 50 per cent above 2018's total. More than 50 of the listings have been on the new tech-focused Star market in Shanghai.

BLOOMBERG