Pace of IPOs slows amid moves to enhance quality of listed companies
▶ Efforts crucial to protect investors, stabilize market
The pace of IPOs in China’s stock market has slowed down, with two “zeros” for the whole trading week starting from Monday, as regulators have tightened scrutiny of new listings to enhance the quality of listed companies – part of the broad-ranging measures to stabilize the capital market.
Enforcing strict regulations on companies looking to go public is crucial in protecting investors and maintaining integrity of the market, experts said.
There were no new IPOs available for subscription and no new listings for a whole trading week from Monday to Friday, for the first time since China’s securities regulator proposed “phased tightening of the IPO pace” in August 2023, according to Wind, a financial information database.
According to Wind data, as of Sunday, 44 companies had terminated their IPOs this year, compared with 25 at the same time last year. Most companies cited reasons such as reevaluating their capital market strategy and future development plans.
As of Sunday, the approval rate for A-share IPOs this year was 88 percent, lower than the approval rate of 90.58 percent for the whole of 2023.
The recent regulatory moves to ensure the quality of listed companies and increase penalties for illegal activities are necessary measures to guarantee high-quality IPOs, Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China, told the Global Times on Monday.
The China Securities Regulatory Commission (CSRC) recently made renewed efforts to thoroughly review companies seeking IPOs and enhance oversight at every stage of the process before and after the listing.
Yan Bojin, head of the CSRC’s department of public offering supervision, told a press conference on Friday that the CSRC is continuously strengthening oversight throughout the entire IPO process and cracking down on fraud.
“The CSRC will also significantly increase on-site inspections of companies planning to go public, in order to improve the quality of listed companies and better protect investors,” Yan said.
Tian Xuan, associate dean and chair professor of finance with the PBC School of Finance at Tsinghua University, who attended a CSRC meeting on February 18, suggested strictly controlling the IPO process and attracting truly high-growth, high-tech companies.
Efforts should be made to strengthen the full-process supervision of listed companies, resolutely delist those that should be delisted, and promote market competition and survival of the fittest, Tian told the Global Times on Monday.
In dealing with fraud and other illegal activities, Tian said that it is crucial to increase penalties. For instance, penalties could be determined based on illegal gains obtained by the violators.