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China to resume IPOs when firms finish share sales

China will resume initial public offerings (IPOs) on its domestic markets once its major listed companies complete their state-owned share sales, state media reported yesterday.

The process could take as long as 12 months, even without waiting for smaller listed firms to divest their state holdings, the Shanghai Securities News reported.

China suspended all IPOs and additional share issues last month in a bid to assist its pilot state-owned share sales program.

Li Qingyuan, director of the Research Center of the China Securities Regulatory Commission (CSRC), said public share sales will restart once the country's biggest 200 to 300 listed companies, accounting for 60 percent to 70 percent of the total market capitalization, have sold their non-tradable state-owned shares.

She said that she thought it "appropriate" that these companies complete their state share sales within one year.

The domestic markets have in recent weeks repeatedly touched new eight-year lows, pushing securities brokerages to near bankruptcy and forcing government intervention.

The slide in prices is partly a result of fears that the trial sale of state-owned shares, previously kept off the market, will dilute the holdings of private investors without providing adequate compensation for those losses.

The state currently controls some two-thirds of the shares in China's listed companies but wants to divest much of its holdings to depoliticize corporate decision-making and increase the rights of minority investors.
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