Chinese companies cancel IPO plans due to listing review

Chinese companies cancel IPO plans due to listing review

An investor watches a board displaying stock information at a brokerage firm in Beijing, China, on October 8, 2018.

SHANGHAI/SINGAPORE – Chinese companies are abandoning plans for initial public offerings in China this year as securities regulators tighten stock listing rules amid a bear market.

Stock exchange data shows that 47 companies have withdrawn their listing plans from China's stock exchanges so far this year, compared with 29 companies in the same period last year.

The cancellations came as the China Securities Regulatory Commission, under new chairman Wu Qing, solicited regulatory opinions from market participants and fined a fraudulently listed company, while taking other steps to restore confidence as major stock indexes hovering near five-year lows.

An official from the China Securities Regulatory Commission also said on Friday that stock issuers will face heavy penalties for accounting fraud and regulators will step up on-site inspections.

Brokerage Shenwan Hongyuan said in a report, “Under high-pressure supervision, the number of IPO (initial public offerings) exits reached a new high.”

read: China's efforts to prop up struggling stock market

At the end of last year, when regulators began to impose periodic restrictions on IPOs to promote a “dynamic balance” between investment and financing, China's new stock issuance once dominated the global IPO market.

quality not quantity

About 313 companies in China completed IPOs last year, raising a total of 356 billion yuan ($49.5 billion), down from 424 companies in 2022, raising a total of 587 billion yuan, according to Guotai Junan Securities.

Last week, the Shenzhen Stock Exchange halted plans for initial public offerings by home appliance maker Ningbo Bolin Electric Co. and diagnostics company Fabon Biotech after the two companies requested to withdraw their listing applications.

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Earlier this month, the China Securities Regulatory Commission fined Shanghai semiconductor company S2C Co. Ltd. for fraud in its listing application, even though the company's IPO plans were canceled in July 2022.

Shenwan Hongyuan Securities said, “This means that the regulatory agency’s penalties for fraudulent issuance have been transferred to the IPO review stage.”

“A-share IPOs will enter an era where quality over quantity,” the brokerage said of stocks listed in mainland China.

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