IPO restart weighs on Chinese shares

Chinese shares tumbled on Monday morning, the first trading day in May, as the country's stocks regulator made moves to start a new round of initial public offering (IPO).

By midday, the benchmark Shanghai Composite Index closed 0.73 percent lower at 2,011.54, while the Shenzhen Component Index dropped 1.19 percent to close at 7,225.84.

On Sunday evening, the China Securities Regulatory Commission (CSRC) unveiled prospectuses of 25 IPO applicants, bringing the total number to 211 since April 19.

The move marked the approaching restart of a new wave of IPO, shaking investor faith and causing concern of increasing pressure on the bearish Chinese stock market.

On April 30, the CSRC approved three applications and said it would review three more on May 7. More than 600 companies are still waiting for listing on the country's two bourses.

Investors' fear of IPO is common in China's stock market, as the country's approving mechanism has been long criticized to allow unqualified companies to enter the capital market which caused huge losses to individual investors.

The latest evidence could be found in the financial reports of the first quarter. Of all the 48 newly-listed companies, 20 posted shrinking profits or even losses, bucking their optimistic prediction before the IPO and arousing doubts over the monitoring work of the CSRC.

In addition, the slowing increase of profits among China's listed companies also weighed on the market. Combined profits of 2,534 listed firms grew 8.08 percent year on year in the first quarter, lower than the 10.7-percent increase in the same period last year.

On Monday morning, liquor producers suffered the most with the sub-index falling 2.12 percent, followed by real estate developers and financial companies.