China will suspend IPOs for up to a month to revamp a system criticised for inflating company values, handing Asia's second-worst performing stock market this year some relief from a flood of new issues.
Analysts say the market should derive much-needed short-term support from the halt, which regulators said would not extend to sales of additional shares by companies already listed.
Stocks have shed a quarter of their value since early April, hit by nation-wide economic curbs and giant share offers - including one from Baosteel that industry sources say could raise up to $3.7 billion and rank as the largest ever.
Now Beijing wants to revive flagging interest in initial public offers (IPOs) as it pushes state-owned firms to list, part of efforts to boost transparency in notoriously murky markets and help moribund firms raise cash to restructure.
The benchmark Shanghai composite index leapt more than 3 percent in early trade on Tuesday as investors cheered the move. It ended the morning session up 1.6 percent, trimming its loss for the year to 10 percent.
Only Thailand has performed worse in Asia.
"Regulators were forced to take steps to help the market after share prices plunged.
There's increasingly a threat that nobody will want to buy IPOs any more if this continues," said Chen Huiqin, an analyst at Huatai Securities.
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