First batch of companies go public under new IPO rules

Under the registration-based initial public offering (IPO) system, 18 companies made their market debut on China’s Nasdaq-style ChiNext board in Shenzhen in the first batch of listings yesterday, two days before the 40th anniversary of the Shenzhen Special Economic Zone.

The launch of the registration-based IPO system is a historic reform masterminded and proposed by President Xi Jinping and a major event in the Chinese capital market this year.

Although not at the launch ceremony, Vice Premier Liu He had a written speech delivered, saying the ChiNext board should better serve fast-growing innovative companies, build its strength and complement other boards to form a multi-level capital market system.

Li Xi, Party chief of Guangdong Province, Yi Huiman, chairman of the China Securities Regulatory Commission (CSRC), Ma Xingrui, governor of Guangdong, and Wang Weizhong, Shenzhen Party chief, attended the ceremony.

Stock prices of all the 18 firms surged in the morning session, rising 158.13 percent on average from the initial offer price.

The first batch of IPO debutants raised 20.06 billion yuan (US$2.9 billion) in total. The firms are primarily in sectors like electronics, special-purpose equipment and medicine.

Under the new listing rules, the daily price fluctuation limit of the ChiNext-listed companies is fixed at 20 percent, double the previous 10-percent cap. There will be no restrictions on price movement of new shares for the first five days of trading.

The Shenzhen Stock Exchange will examine IPO applications based on the quality of disclosures instead of companies’ growth outlook under the revamped IPO system. Companies no longer need to go through the CSRC for approval before listing, which shortens the time for them to go public.

China decided in April to pilot the registration-based IPO system at the ChiNext board to better cultivate new industry startups and bolster the real economy. The system was first tried on the Shanghai bourse’s STAR Market a year ago.

On June 12, the country’s top securities regulator announced a set of supporting regulations for the implementation of the registration-based IPO system on ChiNext.

The technology-focused ChiNext board was launched in 2009 at the Shenzhen Stock Exchange. It has a market capitalization of 8.9 trillion yuan and hosts more than 800 listed companies.

Mr. Zhang, chairman of Shenzhen China Europe Capital, said the IPO reform benefits Chinese venture capitalists, who are finding it easier to raise tech-focused funds, and exit their investments via listings.