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China Limits IPOs to 100 in Second Half Amid Stocks Slump

Photographer: Brent Lewin/Bloomberg

Xiao Gang, chairman of the China Securities Regulatory Commission. Close

Xiao Gang, chairman of the China Securities Regulatory Commission.

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Photographer: Brent Lewin/Bloomberg

Xiao Gang, chairman of the China Securities Regulatory Commission.

China plans to have about 100 initial public offerings from June through the end of this year, less than analyst estimates, as the government eases concern that a flood of new share sales would weigh on the stock market.

The share sales will be spread over time to ensure there are a similar number each month, China Securities Regulatory Commission Chairman Xiao Gang said in a statement on the regulator’s website yesterday. UBS AG China strategist Chen Li said the number of IPOs was fewer than the 350 to 400 share offerings that he had expected and may provide a boost to small-company stocks that entered a bear market last week.

“This removes the uncertainty in the market and investors can prepare accordingly,” said Zeng Xianzhao, an analyst at Everbright Securities Co. in Chongqing. “Moreover, this amount is smaller than expected.”

The CSRC resumed IPO sales in December after a 15-month freeze. The securities regulator halted listings of new share offerings since January to inspect the balance sheet of companies seeking to go public.

Chinese policy makers are seeking to improve the quality of IPOs as part of broader financial reforms aimed at luring investors amid a prolonged slump in the benchmark index.

The Shanghai Composite Index added 0.2 percent to 2,008.12 at the close today. The stocks gauge has plunged 39 percent since the start of 2010. The ChiNext index of small-cap companies rallied 1.7 percent, extending gains to a second day after entering a bear market on May 16 with a loss of 20 percent from the February peak.

Broader Reforms

China’s State Council, or Cabinet, said May 9 that it will deepen reforms to improve the nation’s securities markets. The government last month said it plans to connect the stock exchanges of Hong Kong and Shanghai to promote trading volumes and the use of the yuan.

As of May 9, 557 companies were awaiting approval for first-time share sales, according to China International Capital Corp. The CSRC yesterday posted preliminary IPO prospectuses for 15 companies, of which eight plan to list in Shanghai. Among the candidates are China Building Material Test & Certification Group, CISEN Pharmaceutical Co., Liaoning Fu-An Heavy Industry Co. and Suzhou Douson Drilling & Production Equipment Co.

The regulator also said yesterday that it will further increase the total quota under the Qualified Foreign Institutional Investor program, known as QFII, that allows foreign buyers to invest in yuan-denominated A shares.

To contact Bloomberg News staff for this story: Joshua Fellman in New York at jfellman@bloomberg.net; Weiyi Lim in Singapore at wlim26@bloomberg.net

To contact the editors responsible for this story: Nicholas Wadhams at nwadhams@bloomberg.net Allen Wan

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