The reopening of China's IPO market is good news for speculators and also the western investment banks and advisers who have seen their fees shrivel in the recent IPO drought.
Deloitte told the Financial Times that the Chinese market for accountancy firms had been buoyant during the boom in IPOs and M&A activity, but the firm had been hard hit by the slowdown, forcing it to impose unpaid leave on staff.
Lat September, the government stopped approving IPOs in a bid to stabilise the volatile market. The lifting of the nine-month moratorium coincides with an improving stock market plus an overhaul of regulations.
The new guidelines aim to avoid some of the extreme price volatility of the past and to ensure retail or individual investors are able to get a fair proportion of new share issues.
On Monday, Guilin Sanjin Pharmaceutical,, which makes traditional Chinese medicines, will be the first to experience the new conditions by raising 911m yuan.
The moratorium was a big blow for for the western advisers which had grown fat on fee income during the boom years. It was also a big blow local investors who had grown used to substantial first-day “pops” for IPOs on the Shanghai exchange (pictured) In 2007, only two IPOs posted a loss in their Shanghai debuts, according to Thomson Financial, while the remainder almost tripled in their first day of trading.
Now that the government has reopened the flood gates, a lot more candidates are rushing to get approved, taking advantage of a local equity market that is one of the best performing in the year to date and has recovered last year's big losses.
For example, Tencent, the tech firm behind China's QQ instant messaging service, is gearing up for a Shanghai IPO. Several other heavyweights on the HK bourse — called Red Chips — are also looking to diversify their shareholder base with a mainland listing. These include computer maker Lenovo, China Mobile, the country's largest telecom operator, and China National Offshore Oil Corporation, the mainland's largest offshore oil producer by output.
Another 30 companies have reportedly received regulatory approval to list and have begun final preparation and marketing; 400 more sit in a queue waiting to be approved. More in this (free) Economist story.