China brokers: A-share IPO approval rate bounces back
China is seeing higher A-share IPO approval rates this year.
The approval rate for 2018 was only 48.6 percent, with 55 companies asking to go public being rejected. One brokerage said the high approval rate this year doesn't mean the regulators are losing their grip. Instead, they are asking their brokerages or banks to prepare better before taking the final step and submitting their application.
“The intermediaries are preparing more carefully for the companies' reviews. The regulator is now releasing the details of applications which have failed, and we can learn from those what their concerns were,” said Yang Zhongning, investment consultant of Industrial Securities.
At the same time, the number of companies applying to IPO on the A-share market is falling. As of the end of last week, 41 companies had handed in their IPO requests to the regulator, down 30 percent from the same period last year. However, that does not translate into a cooling IPO market.
“Actually there are a lot of companies eligible to list on the main board. But some of them are waiting for the new tech board since they think of themselves as "science and technology, innovation-oriented." But whether or not they can really be regarded as sci-tech firms depends on the regulator's decision,” said Tang Zhehui, assurance partner of EY.
Tang also noted these combined trends reflected the increasing maturity of China's equity markets. And he said other regulatory changes that point in the same direction, such as the Shanghai and Shenzhen exchanges' decision to force the delisting of companies found in violation of the law.