(Yicai Global) Nov. 9 -- The number of Chinese investors abandoning their pre-listing share subscriptions is on the rise as a big proportion of initial public offerings on the two mainland bourses that offer a more relaxed listing system fall below their issue price, the Securities Times reported today.

The number of new accounts opened on Shanghai’s Star Market for the subscription of new shares has dropped by 16 percent to five million in the last month, and that on Shenzhen’s ChiNext Market has fallen 13 percent to 13 million, the report said.

Qiangrui Precision Technology saw 2.76 percent of its shares discarded by investors before the smartphone assembler was due to go public on Oct. 3, the highest proportion since the registration-based system, which allows companies to go public much more quickly than through the approval-based model that can take months, even years, was introduced in 2019.

IT company Tianyima Information Industry did little better with 2.36 percent being dropped before it went public on Oct. 4. These are also the second and third highest abandonment rates across all the mainland markets since 2010, the report said.

Investors are no doubt discouraged as half of the 18 companies that went public on the two bourses between Oct. 21 and Nov. 5 fell below their IPO price. New stocks have slumped an average of 12 percent this year.

The phenomenon is likely to do with the overpricing of shares, China Merchants Securities said. New rules were brought in by the securities regulator in September to increase supervision of quotations and reject the highest quotations. The average price-to-earnings ratio of companies that went public on the Star Market and the ChiNext board between Sept. 18 and Oct. 31 was 40.71 times.

Editor: Kim Taylor