The Chinese government is considering a delay in the initial public offering of China Nuclear Engineering Corp., according to people with knowledge of the matter.
The delay is being considered because of current market conditions, said the people, who asked not to be identified because the information is private. Regulators are considering suspending IPOs to counter a rout in Chinese shares, with the benchmark Shanghai Composite Index having entered a technical bear market yesterday, separate people with knowledge of the matter said yesterday.
Shares in Shanghai continued to slide today, with the index dropping as much as 5.06 percent in morning trading. Halting IPOs, encouraging insurers to buy shares, easing access to margin financing, reducing stamp duties and cutting lending rates are among steps regulators could take to support the country’s stock market, according to Bank of America Corp. strategist David Cui.
Two calls to China Nuclear Engineering’s board secretary Wang Jiping went unanswered. A fax to the company seeking comments wasn’t replied to.
The China Securities Regulatory Commission approved the IPO of the atomic reactor builder on June 24, according to the regulator’s website. Domestic listings are generally completed within a month of CSRC approval.
Companies and their shareholders have raised $23 billion through 178 initial offerings in China’s domestic market this year, according to data compiled by Bloomberg. That’s more than four times the proceeds for the 52 deals completed in the first half of 2014.
A freeze on IPOs could also hurt the 25 Chinese companies that were taken private this year for about $25 billion from the U.S. stock market, as most of them had planned to list in China for higher valuations.
An IPO of China Nuclear Engineering would help finance about 2.7 billion yuan ($435 million) in projects, according to filings, giving an indication of how much the listing may raise.
There is a queue of 552 companies waiting for approval after filing IPO applications, according to data from the CSRC website. These companies could raise $71.4 billion, based on the average size of $129.4 million for deals completed this year, data compiled by Bloomberg show.
Six companies, including Xinhuanet Co. and Zheshang Securities Co. had their prospectuses published on the CSRC website yesterday in a sign that their IPOs were about to start.
— With assistance by Steven Yang, and Fox Hu