Stocks dive as IPO plans spark liquidity fears

Shanghai stocks took a big hit yesterday after the initial public offering plans of five companies reignited concerns about liquidity in the market.

The benchmark Shanghai Composite Index dropped 1.7 percent to 2,289.87 points.

Zhejiang Wansheng, Jiangsu Province Communications Planning & Design Institute Ltd, Zhejiang Jiuzhou Pharmaceutical and Lanzhou LS Heavy Equipment will start the IPO subscription process tomorrow, followed by Ningbo Orient Wires & Cables on Thursday.

The IPOs are expected to lock more than 600 billion yuan (US$98 billion) of funds in subscriptions, Guangzhou Securities said in a statement yesterday.

The brokerage also said investors may take in more profits this week to hold cash for the week-long holiday next week, adding to the liquidity pressures in the A-share market.