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New IPOs weigh on market, drag index down 0.22%
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SHANGHAI stocks ended lower today as concerns that new-share sales will drain funds away from existing shares continued to weigh on the market.
The benchmark Shanghai Composite Index lost 0.22 percent, or 4.59 points, to 2,054.48. Turnover was 75.7 billion yuan (US$12.2 billion) at the trading close.
“Shrinking turnover indicates investors are taking a cautious stance ahead of the second batch of initial public offerings,” said Shenyin & Wanguo Securities.
Eleven of the 12 companies that received regulatory approval to go public will start taking subscriptions on Wednesday and Thursday to raise a total of 5.83 billion yuan.
A Haitong Securities report said new offerings are expected to lock in 910 billion yuan in funds even by conservative estimates.
“Enthusiasm for IPOs is running high because new shares tend to come at lower prices on new IPO rules,” said the broker, “Intensive IPOs will impact market liquidity and weight on the market.”
The composite index dropped 2.13 percent during the week of June 16 to 20 when six of the first batch of IPOs opened for subscriptions.
Analysts with Dongguan Securities said the market is expected to fluctuate in the short term with the support of such positive factors as the state enterprise reform and a recovering economy.
Heavyweight oil shares led the market down. China Petroleum & Chemical fell 1.6 percent to 4.89 yuan. PetroChina lost 0.7 percent to 7.50 yuan.
China Eastern Airlines lost 1.3 percent to 2.34 yuan after the company predicted a net profit of 50 million yuan for the first half of 2014, a sharp decline from 763 million yuan of the same period last year.
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