China will resume initial public offerings and end a four-month freeze as the stock market recovers from this summer's dramatic rout, according to the securities regulator.
The China Securities Regulatory Commission plans to restart IPOs before the year end, spokesman Deng Ge told a media briefing in Beijing late last week. Ten of the 28 companies which had gained listing approval before the suspension went into effect would be the first to list, Deng said, adding that these companies have two weeks to prepare for the IPOs. The remaining 18 will go public by the end of the year.
China suspended IPOs in early July as part of emergency measures to contain a massive meltdown that sent the stock market plunging over 40 percent in weeks.
"The resumption came at an appropriate time as the market has stabilized and investor sentiment has started to heat up," said Lu Zhengwei, chief economist with the Industrial Bank.
The Shanghai Composite Index rose 1.9 percent to close at the highest in 11 weeks on last Friday before the CSRC announcement. It has gained 26 percent from a low on August 26.
But investors worry that new share sales will divert funds from existing shares.
"Market sentiment may suffer a bit from the resumption but it won't have a substantial impact," said Qian Qimin, an analyst at Shenwan Hongyuan Group.
More than 600 companies are still waiting to list shares on the Shanghai and Shenzhen stock exchanges.
