Talks held over China’s IPO spike

Regulator reaches out to stakeholders as significant jump in IPO approvals puts downward pressure on share prices

China’s stock-market jitters have persisted into 2017, with Reuters reporting that officials from the China Securities Regulatory Commission (CSRC) have met stakeholders to discuss the impact of a recent spike in IPO approvals.

According to the report, the CSRC gave the green light to 131 IPOs in the final quarter of 2016 – up a whopping 367% on the same period of the previous year.

As a result of those approvals, the higher proportion of equity in the market has weighed heavily on share prices.

While the CSRC has not commented on the nature of the talks – or the feedback it received from stakeholders – it is likely that the regulator reached out to allay fears that sluggish market conditions would prevail in the year ahead.

The regulator’s diplomatic overtures to key parts of its community follow its fury just days before with others.

On 12 January, it emerged that the CSRC had castigated an unnamed selection of local government-owned stock exchanges located in various parts of China.

The sweeping censure follows an investigation by a CSRC task force, which revealed that the exchanges had enabled prohibited actions such as:

  • illegal fundraising;
  • market-price manipulation; and
  • attracting investors with insufficient risk tolerance.

“Malpractices at some exchanges have risen again from the ashes,” said the task force, “and [those exchanges] have used a smorgasbord of tricks to break laws and violate regulations.”

The investigative unit also attacked local governments for “blindly and repeatedly” setting up exchanges and trading platforms that were unfit for purpose.

That followed CSRC chairman Liu Shiyu’s promise at the beginning of the year that wrongdoers would be subject to swifter action in 2017, in the wake of blockbusting capital seizures in 2016.

Funds confiscated last year amounted to ¥4.28bn ($622.08m): a whopping 288% rise on assets seized in 2015.

During a visit to the CSRC’s inspection bureau, the chairman told the media that his agency would “severely punish capital magnets who challenge the foundation of the law”, and said it would catch “the mice as well as the wolves”.

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