China's securities regulator recently approved IPO plans for 20 companies - 10 of which will list at markets in Shanghai and Shenzhen respectively. The size and suddenness of these issuances put some investors on edge.
China's capital market has witnessed several rounds of IPOs since June, with an average of 11 listing plans approved in each instance. The pace of approvals may be somewhat alarming, but the ultimate outcome depends largely on market circumstances.
For instance, in January 2007, 11 IPOs were launched, representing a sizable year-on-year volume increase. The stock market performed well that month, picking up some 4 percent. Later, the Shanghai index rose 17 percent month-on-month in August 2007 when 21 IPOs were recorded. Things changed suddenly though in 2008, when new offers continued pouring in despite a huge plunge in prices.
Much has changed at China's markets over the past several years. Authorities have been reportedly planning a registration-based IPO system aimed at cultivating a healthy market. Current gains are beneficial for companies in search of capital. Investors need not to worry too much about recent IPOs.
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