Regulators yesterday lifted a nine-month ban on Chinese initial public offerings (IPO) after markets rebounded in recent months from the plunge that prompted the moratorium.
A small drug maker, Guilin Sanjin Pharmaceutical Co (桂林三金藥業), announced it would launch the first IPO this year, debuting on June 29 in Shenzhen, where the smaller of China’s two exchanges is located.
“Now it is a good time for the regulator to lift the ban, since the benchmark has been up so much. The regulator seems to be eager to push this ahead,” said Zhang Xiang, an analyst for Beijing-based Guodu Securities.
The benchmark Shanghai Composite Index has surged 57 percent since the start of the year, lifted by optimism over the government’s multibillion-dollar stimulus spending. It closed on Thursday at 2,853.9, its highest since last July 28.
Guilin Sanjin said in an announcement through the Shenzhen exchange that it will issue up to 46 million new shares to raise funds for projects requiring 634 million yuan (US$93 million) in total investment.
Regulators are likely to move gradually in allowing more IPOs to test the market’s ability to absorb them, Zhang said.
Some investors worry that too many new shares flooding into the market will depress prices.
China halted IPOs last September after the Shanghai index tumbled 60 percent from its high the previous year. At the time, 37 companies had received regulatory approval for IPOs.
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