China securities regulator says to resume IPOs

An electronic board showing the benchmark Shanghai and Shenzhen stock indices in Shanghai, China. PHOTO: REUTERS
An electronic board showing the benchmark Shanghai and Shenzhen stock indices in Shanghai, China. PHOTO: REUTERS

BEIJING/SHANGHAI (REUTERS) - China's securities regulator said on Friday it would allow the resumption of initial public offerings in China, lifting a suspension put into effect in July as regulators desperately tried to slow a devastating stock market crash.

China Securities Regulatory Commission (CSRC) spokesman Deng Ge made the announcement at a weekly news conference in Beijing.

The CSRC said that 28 companies which had seen their already-approved listings halted by the freeze would be the first out of the gate, adding they have two weeks to prepare for the resumption.

The announcement comes after signs Chinese stock markets have finally stabilised; this week the CSI300 index posted its best weekly performance since June with rising transaction volumes.

Mainland stock indexes are up by more than 25 percent from the troughs they hit during the August stock crash, and trading volumes soared to a three-month high this week.

In the past investors have reacted negatively to IPOs, seeing them as cannibalizing funds from existing listings and diluting valuations.

The sharp crash in June, that saw major indexes plunge more than 30 percent in just a few weeks, was blamed in part to an IPO glut hitting an already frothy and heavily leveraged market.