Analysis | China’s regulator rejects the most number of IPOs in four years to control stock market’s quality
CSRC seen as seeking a balance between easing the IPO backlog, keeping the market calm and improving the quality of listed companies
China’s securities regulator is rejecting initial public offering applications at the fastest pace in four years, suggesting it is getting tougher on the rules introduced to improve the quality of listed companies while speeding up the approval process at the same time.
Analysts believe the China Securities Regulatory Commission is seeking a balance between easing the logjam in the IPO pipeline and boosting investor confidence.
They also regard the moves as paving the way for an overhaul that could in the longer term give the market more power over the listing process.
By May 19, the regulator had approved 188 listings after reviewing 257 applicants since the turn of the year, “that’s a 73.2 per cent pass rate”, CSRC spokesman Deng Ge said.
It is also the first time the pass rate has dropped below 80 per cent since 2013, when the commission put a blanket freeze on IPOs for more than a year during the stock market rout.
According to data compiled by accounting firm Grant Thornton China, the CSRC approved 247 new listings in 2016 out of 275 applicants, an 89.8 per cent pass rate. In 2014 and 2015, the pass rate was 83.2 per cent and 89 per cent, respectively.
