CSRC restarts IPO approval procedures

The China Securities Regulatory Commission (CSRC) gave the green light on September 28, the day before the country's financial markets closed for an eight-day holiday, to Beijing Zhongkuang Environmental Protection Science and Technology Co Ltd to launch an initial public offering (IPO) on the ChiNext board at the Shenzhen Stock Exchange, according to an announcement on the CSRC's official website, a move which ends the regulatory body's two-month suspension on new IPOs, the longest halt on new offerings since July 2009.

The CSRC also announced on the same day that it would resume examination of IPO applications for main boards starting Wednesday, when it will review listing plans from Chongqing Gas Group Corporation Ltd and Shenzhen Suntak Circuit Technology Co Ltd.

Though the CSRC may be reopening the door on new listings, experts contacted by the Global Times Sunday were skeptical about whether China's securities regulators intend to issue approvals with the same frequency seen in recent years.

Between July 2009 and June 2012, the CSRC consistently cleared over 10 IPOs each week, Zhang Xin, an analyst with Shanghai-based Guotai Junan Securities, told the Global Times. The approval pace lost momentum in July and then stopped completely in August and most of September amid concerns that the flood of new listings was diluting liquidity in the sluggish equity market, Zhang explained.

During the third quarter, mainland boards saw 43 new public listings which together raised 26.79 billion yuan ($4.26 billion) in financing, down 24.6 percent and 30 percent respectively quarter-on-quarter, both three year lows, according to figures from the CSRC.

Yet, despite the CSRC's recent freeze on IPO approvals, local firms are still clamoring to start trading at mainland stock exchanges, given that public listings are considered the easiest way to secure financing in the country, according to Li Bo, an analyst with GF Securities.

As of September 6, China had 758 domestic companies in the IPO pipeline awaiting regulatory approval to list, according to a recent report in the China Business News, citing CSRC figures.

With mainland stock markets still depressed and likely headed for a prolonged period of sluggishness, the CSRC will probably be more selective with new offerings even though it is set to again start scheduling listing examination meetings, said Zhang.

Li added that recent efforts by Chinese financial regulators to make it easier for local companies, especially small and medium-sized enterprises, to tap the debt market instead of seeking equity investment for financing indicate that the days of rapid IPO approvals are at an end.