World Markets
Ban Lifted on Chinese IPOs
The Associated Press
06/19/09 - 05:11 AM EDT
BEIJING -- Regulators on Friday lifted a nine-month ban on Chinese initial public stock offerings after markets rebounded in recent months from the plunge that prompted the moratorium.
A small drug maker, Guilin Sanjin Pharmaceutical, announced it will become the first IPO of 2009, debuting June 29 in Shenzhen, where the smaller of China's two exchanges is located.
"Now it is a good time for the regulator to lift the ban, since the benchmark has been up so much. The regulator seems to be eager to push this ahead," said Zhang Xiang, an analyst for Guodu Securities in Beijing.
The benchmark Shanghai Composite Index has surged 57% since the start of the year, lifted by optimism over the government's multibillion-dollar stimulus spending.
Guilin Sanjin said in an announcement through the Shenzhen exchange that it will issue up to 46 million new shares to raise funds for projects requiring 634 million yuan ($93 million) in total investment.
The decision to begin gradually with a smaller company reassured investors who worried that the first IPOs might be for big companies, which could depress prices by flooding the market with shares.
"To start with the smaller companies showed the regulator's determination to shore up the market, with a testing gesture first," said Wen Lijun, an analyst for Nanjing Securities.
China halted IPOs last September after the Shanghai index tumbled 60% from its high the previous year. At that point, 37 companies had received regulatory approval for IPOs.
On Friday, the news of more possible IPOs helped to lift the stock prices of Chinese brokerages in anticipation of more business. Sinolink Securities climbed by the daily 10% limit, while Northeast Securities Co. surged 5.7%.