Chinese regulators are considering the suspension of initial public offerings (IPOs) to stabilize the country’s tumbling stock markets, people familiar with the matter said.
The China Securities Regulatory Commission was scheduled to meet yesterday afternoon with major brokerages, another person said, without saying what would be discussed. The people asked not to be identified, as the regulator’s deliberations are private.
Commission officials did not immediately respond to a faxed request for comment.
Photo: AP
Halting IPOs would head off any diversion of funds into new listings and would come on top of a weekend interest-rate cut that was viewed by some analysts as a move to curb Chinese equities’ plunge into a bear market.
The Shanghai Composite Index dropped 3.3 percent yesterday, taking declines from its June 12 peak to more than 22 percent.
“Suspending IPOs will definitely provide some support to the stock market,” Zheshang Securities Co (浙商證券) Shanghai-based analyst Zhang Yanbing (張彥斌) said. “There have been a lot of IPOs recently, including several really big ones, putting pressure on market liquidity.”
July futures on the FTSE China A50 Index traded in Singapore rose 1.7 percent as of 5:46pm.
Subscriptions for 28 upcoming IPOs in China might tie up 4.03 trillion yuan (US$649.05 billion) of liquidity starting early next month, according to the median estimate of six analysts surveyed by Bloomberg.
The 175 IPOs in China this year have raised about US$22.7 billion, data compiled by Bloomberg showed.
China’s securities regulator has suspended IPOs eight times in the history of the yuan-denominated A-share market, five of which were imposed since 2000, Xinhua news agency reported in April 2013.
The previous moratorium was imposed in late 2012 and lifted in December 2013, as the regulator revised IPO rules to better protect individual investors from fraud and misconduct among advisers and issuers.
Chinese government action helped the Shanghai gauge surge more than 150 percent in the 12 months prior to its June 12 peak, as authorities cut trading fees, made it cheaper to open new stock accounts, expanded investment quotas for overseas money managers and eased rules on margin lending.
They also lowered interest rates three times before last weekend and reduced lenders’ reserve requirement ratios twice.
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