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IPO
BusinessChina Business

China’s first-quarter IPOs plunge 65% as regulator’s focus on listing quality saps pipeline

  • IPOs have raised 23 billion yuan (US$3.18 billion) in the first quarter, compared with 65.1 billion yuan in the same period in 2023
  • ‘The slowdown in IPOs will carry on, and the listing process for mega IPOs is expected to be lengthened,’ analyst says

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Pedestrians ride escalators in Pudong’s Lujiazui financial district in Shanghai on January 29, 2024. Photo: Bloomberg
Zhang Shidongin Shanghai
China’s initial public offerings (IPOs) tumbled 65 per cent in the first quarter, a trend that is likely to persist through the year as the securities regulator has pledged to improve the quality of new listings and apply more scrutiny to listing applicants.
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Twenty-eight companies have raised a total of 23 billion yuan (US$3.18 billion) by selling new shares on the mainland’s three exchanges, compared with 68 listings that raised 65.1 billion yuan in the first three months of 2023, according to Bloomberg data.

The slump reflects a shift in the regulator’s stance on fundraising, which investors blamed for causing a glut of stock issuance and contributing to a three-year downturn in stocks. The China Securities Regulatory Commission (CSRC) said it would tighten listing rules, particularly on applicants without a profit record, and conduct more random checks on applications to eradicate accounting fraud and prevent excessive fundraising.

These steps add to measures that have been in place since August to slow the pace of new offerings to bolster investors’ confidence.

A man walks in the Shanghai Stock Exchange building at the Pudong financial district in Shanghai in February 2020. Photo: Reuters
A man walks in the Shanghai Stock Exchange building at the Pudong financial district in Shanghai in February 2020. Photo: Reuters

“The slowdown in IPOs will carry on, and the listing process for mega IPOs is expected to be lengthened,” said Wang Zhengzhi, an analyst at Guotai Junan Securities in Shanghai. “The purpose is to guard against risks and promote the high-quality development of the capital market.”

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The biggest IPO this year is Grandtop Yongxing Group, a Guangdong province-based waste treatment company that started trading in Shanghai on January 18 after raising 2.43 billion yuan, Bloomberg data shows. That is about half the size of the most valuable deal in the January-March period in 2023, when Hunan Yuneng New Energy Battery Material raked in 4.5 billion yuan on the Shenzhen bourse. Grandtop now trades at about 18 per cent below its offer price of 16.20 yuan.

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