China reg­u­la­tors likely to al­low a wave of share of­fer­ings in 2015


China is ex­pected to al­low sig­nif­i­cantly more com­pa­nies to list on its stock ex­changes this year, with some an­a­lysts pre­dict­ing pro­ceeds from ini­tial pub­lic of­fer­ings will nearly dou­ble to $20 bil­lion.

An­tic­i­pa­tion of a busier IPO pipe­line stems from the belief that the mar­ket's re­cent rally has re­duced con­cern among reg­u­la­tors that an in­crease in sup­ply could spook in­vestors. The China Se­cu­ri­ties Reg­u­la­tory Com­mis­sion (CSRC) said late on Mon­day it had ap­proved list­ings by 20 firms - about twice the av­er­age monthly av­er­age last year - un­der­scor­ing its de­sire to throw open the IPO mar­ket.

"It makes sense for them right now - given how fast the mar­ket's gone up - to ac­tu­ally suck up some of the liq­uid­ity with the new IPOs," said Fran­cis Che­ung, head of China eq­uity strat­egy at CLSA in Hong Kong. "They need to bal­ance. I don't think they want to crash the mar­ket," he said.

The stock mar­ket, which ral­lied over 40 per­cent in the fourth quar­ter of 2014, fell on Tues­day and rose marginally on Wed­nes­day. It was the best per­form­ing ma­jor mar­ket in 2014, ris­ing to its high­est lev­els in close to five years.

Around 650 com­pa­nies are cur­rently wait­ing to list, with most of them in the line since be­fore late 2012 when CSRC froze all IPO ap­provals for over an year as it over­hauled the mar­ket. Many un­listed small and mid-sized firms have been strug­gling to find sources of funds out­side of China's over­bur­dened bank­ing sys­tem.

An­a­lysts at Deloitte es­ti­mate be­tween 180-200 main­land com­pa­nies will raise be­tween 100 bil­lion yuan and 120 bil­lion yuan ($16.1 bil­lion to $19.3 bil­lion) via IPOs this year. Man­u­fac­tur­ing, con­sumer and re­tail and emerg­ing in­dus­tries will dom­i­nate the of­fer­ings, they said. Price­Wa­ter­house­Coop­ers forecasts China's IPO mar­ket in 2015 could be even big­ger, rais­ing around 130 bil­lion yuan.

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