Tighter IPO scrutiny helps index to close higher

Shanghai stocks edged up yesterday after a report said China's securities watchdog will tighten checks on the financial ability of firms planning to list.

The Shanghai Composite Index added 0.27 percent to 2,159.05 points.

The China Securities Regulatory Commission will require companies which filed applications for initial public offerings on the Shanghai and Shenzhen exchanges to verify their financial status in the first quarter of 2013, the China Securities Journal said yesterday, citing unnamed sources.

The CSRC will also check the firms randomly and terminate applications of those with flawed IPO documents, the report said.

Over 800 firms have applied to launch IPOs on the two bourses, seeking to raise about 500 billion yuan (US$80.6 billion), said a report by Ernst & Young.

Wu Xiaohui, a partner of Deloitte Touche Tohmatsu CPA Ltd, said about 20 percent of the IPO applicants will have to withdraw their filings next year.

"The government will also encourage domestic firms to raise money from China's bond market and will lower the threshold for companies to list on the Hong Kong exchange," Wu said.

Haitong Securities added 1.4 percent to 9.55 yuan, after the broker and six other Chinese brokerages were allowed to trade over-the-counter in unlisted shares under a trial program.

Zeng Xianzhao, an analyst at Everbright Securities, said the OTC market may help participating brokerages generate more than 20 billion yuan in net profit annually.