Mainland IPO approvals send shares down amid liquidity worries
Share prices fall after 11 firms are given permission to list in Shanghai and Shenzhen
Beijing approved the initial public offerings of another 11 companies on the mainland stock market, knocking the key indicator down 1.8 per cent yesterday as some investors cashed out to prepare for the listing of the lucrative new shares.
The China Securities Regulatory Commission (CSRC) announced on Monday evening that five of the firms would float shares on the Shanghai Stock Exchange and the remaining six would raise funds on the Shenzhen Stock Exchange - five on the Nasdaq-style ChiNext market and one on the SME board.
It was the fourth batch of offerings approved by the CSRC since the regulator set a total quota of 100 new share sales in May for the June-December period.
The Shanghai Composite Index yesterday dropped 42.59 points, or 1.8 per cent, to 2,296.56, its biggest single-day loss since March 10.
"The news about the IPOs prompted some speculative investors to dump their existing shares to have more cash on hand to subscribe to the new shares," said Haitong Securities analyst Zhang Qi. "The IPOs are more attractive to investors than the currently listed shares."
To date, the regulator has granted 44 listing approvals since June and another 56 firms would likely receive permission to float shares within this year. The previous 33 firms had sparkling debuts on the mainland market with nearly all of them surging to the 44 per cent first-day trading cap.
