Regulator approves 9 of 13 IPOs

By Wang Yanlin  |   2008-6-26  |     NEWSPAPER EDITION

CHINA'S stock regulator has quickened the pace of approving initial public offerings but still refrained from giving the nod to large fund-raising proposals, indicating concerns of adding more pressure to the already weak market.

The China Securities Regulatory Commission has approved nine IPOs out of 13 applicants this month by June 23 - two of the four dropping out were denied and the others were under review, reported Beijing Business Today.

Last month none of the two applicants got approval from the stock regulator.

However, Shandong Molong Petroleum Machinery Co Ltd, the biggest issue this month, only involved 700 million shares, while Sichuan Expressway Co Ltd, the second largest, only planned to issue 500 million shares.

They were considerably less than the previous big IPOs such as China Railway Construction Corp Ltd, which made public 2.8 billion shares.

"The regulator expects to offer more IPOs this year than last year. But the speed of launching new shares has been quite slow so far because of the weak market performance. It makes the regulator speed up the pace of reviewing," said Liu Yang, an analyst with the China Securities Co.

"But most approvals are given to small and middle-sized fund-raising proposals."

China's stock market has kept plunging since late last year. The benchmark Shanghai Composite Index has fallen more than 50 percent to below 2,800 since October last year when it hit the record high.

Meanwhile, the average price-to-earnings ratio for A shares in Shanghai and Shenzhen has dropped to 23.51 times from 81.02 times in October. The PE ratio now was not far from the 19.96 times recorded during the stock market slump in the middle of 2005.

It suggested the value of shares has grown to a level that investors can consider long-term investments, analysts said.