China’s securities regulator suspended reviews of initial public offerings and other share sales, people familiar with the matter said, in the government’s latest salvo to contain the nation’s market rout.
Meetings to review share-sale applications that were set through next week with the China Securities Regulatory Commission have been shelved, the people said, asking not to be identified because the decision hasn’t been made public. The CSRC didn’t immediately respond to a faxed request for comment.
With China unleashing measure after measure to contain the meltdown, Warren Buffett-backed automaker BYD Co. and China Railway Group Ltd. are among the hundreds of companies staring at more than $154 billion of follow-on offerings that are at risk, according to data compiled by Bloomberg. Chinese stocks have lost more than $3 trillion in market value in less than a month despite the various government measures.
“Selling new shares now, whether publicly or privately, is like trying to draw blood from a patient who’s already looking so weak and pale,” said Zhang Qi, an analyst at Haitong Securities Co. in Shanghai.
While China suspended IPOs earlier this month, it was still reviewing them amid plunging equity prices.
The government saw some relief today as the Shanghai Composite Index climbed 5.8 percent on Thursday after falling in 8 of the past 10 sessions.
China Grand Automotive Services Co. was among the fortunate few managing to complete a share placement before such deals ground to a halt.
Others haven’t been as lucky as the rout drove shares below their intended placement price. In Shenzhen, brokerage Shenwan Hongyuan Group Co. and electric-car maker BYD are trading below their offer prices. Still, companies such as China Railway above their placement price.
BYD spokeswoman Sherry Li said the market has been acting “irrational” recently and that the company is proceeding with its plans, echoing comments by Bright Food Group Co. spokesman Pan Jianjun.
China Railway didn’t respond to a faxed request for comment, while Shenwan Hongyuan declined to comment.
“If I were them, I would cancel the offering if there is no urgent need for the cash,” said Hong Hao, Bocom International Holdings Co.’s Hong Kong-based chief strategist, in reference to companies seeking to sell shares. “Any kind of fundraising will be difficult to place in this market.”
— With assistance by Clement Tan, Yang Sheng, Yi Zhu, and Steven Yang