Capital raised from China IPOs in 8-year low in '04
BEIJING - Consistent with the bearishness of the secondary market over the past three years, the amount of capital raised from initial public offerings (IPOs) on the Shanghai and Shenzhen stock exchanges has slid to an eight-year low this year.
In 2004, 98 companies undertook IPOs on the two bourses, raising a total capital of 35.3 billion yuan (US$4.3 billion), down 22% from the 45.4 billion yuan in 2003 and less than half of the peak 81.3 billion yuan in 2000.
The amount of capital raised hit an eight-year low since 1997, and has been decreasing for four years in succession.
As 38 small companies were listed on the Board for Small and Medium-sized Enterprises on the Shenzhen Stock Exchange after June 2, the number of IPOs was more than that in 2003, which stood at 66. These 38 companies, 30 of which being non-governmental enterprises, raised a total capital of 9.018 billion yuan, or an average of 240 million yuan per company.
Critically, IPOs have been suspended since August and will not be resumed before the price inquiry system for IPOs is implemented as of January 1, 2005.
Quick market capacity expansion soon led to continuous slide of share prices on the secondary market, which led to fall below the issue price of IPOs just on their debut day or several days after their debut on the secondary market. As a consequence, the IPO underwriters had to take the issues themselves, leading to the China Securities Regulatory Commission suspending IPOs on August 30.
Of the 98 IPOs in 2004, 74 were made in the first half of the year, raising a total capital of 28.37 billion yuan, or 80% of the yearly total.
The month of June, when the Board for Small and Medium-sized Enterprises was launched, saw the biggest raising of 8.89 billion yuan from 30 IPOs.
atimes.com |
