Chinese shares rise

China stocks closed up on Monday, as investors welcomed Friday evening's announcement by the securities regulator that initial public offerings (IPOs) would resume in the next several weeks. After a lull of more than three months and the market now up over 20 percent from its September low, regulators appear to have concluded that sentiment has recovered sufficiently to permit some additional supply of shares.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 1.2 percent, to 3,840.35, while the Shanghai Composite Index gained 1.6 percent, to 3,646.88 points. Among the most active stocks in Shanghai were Agricultural Bank of China, up 3.8 percent to 3.32 yuan; Bank of China, up 4.2 percent to 4.18 yuan and China State Con, up 0.1 percent to 7.11 yuan.
In Shenzhen, BOE Technology, up 0.3 percent to 3.12 yuan; Tongling NFM, down 1.1 percent to 3.78 yuan and Suning Appliance, down 1.3 percent to 17.07 yuan were among the most actively traded. Total turnover of A shares traded in Shanghai was 50.2 billion lots, while Shenzhen volume was 42.2 billion lots. Analysts say China's abrupt equity market crash this summer, which pushed the benchmark CSI300 index down around 40 percent, was exacerbated by a stampede of firms looking to list while prices were at their peak in late spring and early summer.
Companies in mainland China had raised $23.4 billion in IPOs in 2015 through mid-June before regulators suspended deals, far surpassing the $13.2 billion in all of 2014, Thomson Reuters data showed. At one point the CSRC was letting 40 companies list every week and there were even more secondary issuances. But with equities now up around 20 percent from their late summer lows - technically marking a return to a bull market - regulators appear to have concluded that sentiment has recovered sufficiently to permit some new additional supply of shares.
Banking and finance shares led the major indexes higher in morning trade, as investors piled into stocks which had been beaten down in the midst of the equity correction. "The re-launch of IPOs gave out a sign that the market has started to be normal and relatively stable after a series of crackdowns and corrections," said an equity trader at a securities company in Shanghai. "The banking shares, with low valuations, might be the first choice for investors, attracting bargain-hunting buyers."
Adding to the good news on Monday was the successful Hong Kong IPO of China International Capital Corp, China's oldest domestic investment bank. The IPO raised $811 million, and shares jumped up to 11 percent in the company's Hong Kong debut. Traders said they believed the renewed bullish trend still had room to run, although many investors were still sitting on losses from the abrupt correction this summer. "Everybody believes that the government will support the market by permitting IPOs to resume," said Zheng Weigang, a senior trader at Shanghai Securities.