In a bid to boost international confidence, the country’s financial market watchdog – the China Securities Regulatory Commission – is to launch a programme of random checks on initial public offering applicants to ensure they are complying with beefed up rules.

Falling short

According to a Reuters news agency report on the Asian Legal Business web site, the development is born out of international pressure, with senior Beijing figures smarting at global suggestions that the jurisdiction falls short of accepted standards.  
Regional experts claim the move is directly aimed at repairing China’s tarnished IPO image. Liang Jing, a financial analyst at Guotai Junan Securities, told the news agency that Beijing was ‘weeding out some unqualified IPO applicants.’ The move, he said, ‘will add more burden to underwriters, and obviously, some deals would have to be cancelled.’

Frozen market

The report points out that the local IPO market has been frozen for the last three months, owing to regulator concern that a flood of applicants – more than 880 are queuing – would damage the quality of the stock market. Indeed, it is envisaged that the freeze could last well into the new year, with some suggesting it won’t be lifted until March at the earliest.