Translated by Andrew Vanburen from a Chinese-language piece in Shanghai Securities Journal
YOU CAN JUDGE the delectability of a diner’s desserts by the number of patrons sticking around to await one last course.
The same might be said for the stock market, where general investor sentiment might partially be gauged by the volume of aspirants hoping to make it onto the capital raising boards.
If this latter litmus test holds any water at all, then by the look of things these days, the growing ranks of firms awaiting IPOs in Mainland China could mean that the market isn’t as dour as many think.
Three notable IPOs pulled their plans to go public in Hong Kong last week, but by some measures the opposite phenomenon is taking place across the de facto border in the PRC.
Last week alone saw five new candidates given preliminary listing approval on the country’s capital markets, and they now stretch the IPO waiting list to a grand total of 582 firms.
According to the latest available statistics from the country’s market watchdog – the China Securities Regulatory Commission – last week also saw two firms denied their dream of hanging their respective shingles on the bourse.
In a sign that the CSRC isn’t necessarily lowering its standards for IPO hopefuls, both Jiangsu Olive Sensors High-tech and Chengdu-based software developer Follow Me Co had their applications denied.
Jiangsu Olive Sensors signed on Sinolink Securities (SHA: 600109) as its underwriter, but its IPO campaign fell short after questions were raised in the media about the sustainability and accounting accuracy of some of its business models.
Meanwhile, fellow listing reject Follow Me Co, who hired Minsheng Securities as its underwriter, received negative feedback during roadshows which led to the software play’s being turned down.
But winners outnumbered losers last week, as five new firms advanced to the waiting list stage.
Making it through to the final round were: Fujian-based apparel play N&Q, fiber optic cable maker Shanghai Wangxun New Material, porcelain tableware producer Guangdong Songfa, power distribution equipment maker Beijing SOJO Electric and Baoding Lucky Innovative Materials.
The steady growth in firms willing to take the plunge – and the apparently growing willingness of the market regulator to allow them to progress to the final stage – should bring some cheer to investors looking for any silver linings they can lay their eyes on.
Another aspect to the most recent pool of selectees is the eclectic nature of their businesses.
If the CSRC were letting in oil firms left, right and center, or allowing gold miners to float IPOs with all the measured sanity of a commodity rush, then there would be cause for alarm rather than optimism.
But the diverse nature of firms entering the coveted IPO waiting list in China these days is testimony to the general health and vitality of the entire economy as opposed to just a fashionable few firms being ushered in.
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