Shanghai Star Market IPOs Drop to Record Low on Stricter Reviews
Xu Yu
DATE:  Apr 02 2024
/ SOURCE:  Yicai
Shanghai Star Market IPOs Drop to Record Low on Stricter Reviews Shanghai Star Market IPOs Drop to Record Low on Stricter Reviews

(Yicai) April 2 -- The number of stock listings on Shanghai’s Nasdaq-style Star Market plunged in the first quarter to the lowest level since it was set up in 2019 on the back of stricter reviews by China’s securities regulator.

Only four initial public offerings were completed on the Star Market in the three months ended March 31, a 56 percent drop from a year earlier and down 20 percent on the previous quarter, according to data released by Zero2IPO Research yesterday.

The number of IPOs on the Shanghai Stock Exchange’s science and technology board started to decrease after the China Securities Regulatory Commission issued new policies at the end 2022. Last year, the figure nearly halved to 67 from 123 the year before.

The CSRC raised the bar for businesses seeking to list on the Star Market, such as the ratio of their spending on research and development to operating revenue and that of their R&D staff to the total, an industry analyst said. That has led many unqualified firms to withdraw or not submit listing applications, he said.

New listings on the ChiNext, the Shenzhen Stock Exchange’s tech-heavy board, also plunged over the same period, but by less than its Shanghai counterpart.

Listing sponsors have also tightened examinations of firms planning to go public on the Star Market since the CSRC introduced the new policies, leading to a plunge in the numbers applying to IPO, an industry insider told Yicai.

“Furthermore, the market environment has not been good since 2022, putting much operating pressure on many companies,” the insider added. “For example, semiconductor firms saw a huge drop in earnings, disqualifying some from listing on the Star Market.”

IPOs on the main boards of the SSE and the SZSE also fell in the first quarter. They more than halved from a year earlier, Zero2IPO Research’s data showed. Meanwhile, eight companies went public on the Beijing Stock Exchange and eight on the ChiNext.

In the same period, 80 companies withdrew their IPOs for Chinese mainland bourses, according to figure from Wind Information. Some said the main reason was that their earnings were unlikely to pass muster, while others said it was because they were told they had been selected for on-site inspection by the regulator.

Editors: Tang Shihua, Futura Costaglione

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Keywords:   IPO,Technology Innovative Company,Regulatory Adjustment,STAR Market,Stock Market