China is likely to resume approving initial public offerings at the end of July, sources quoted a senior regulator as saying on Tuesday, after a freeze since October as part of efforts to crack down on wrongdoing and restore investor confidence.
The IPO resumption, which had been expected around midyear, follows the release of draft rules early this month to reform IPO mechanisms, including greater freedom on the timing of listings and strict penalties for underwriters that give misleading information.
Given recent market weakness, analysts do not expect a rush of companies to market despite a long backlog of applications, although the resumption will be a boon for the mainland's brokerages.
Yao Gang, vice chairman of the China Securities Regulatory Commission (CSRC), told brokerages at a meeting on Tuesday that "it is almost certain" that IPOs will resume at the end of next month, people who were present at the meeting said. They declined to be identified because they are not authorised to speak to the media. Officials at the CSRC, which has never publicly indicated how long its IPO freeze would last, did not respond to Reuters requests for comment.
China suspended IPO approvals in late October as part of a crackdown on fraud in the equity market. The number of IPO applicants in China has shrunk 17 percent to 666 from more than 800 last November, as companies dropped their listing plans due to accounting issues or a slump in profits. The CSRC ordered underwriters to audit all applicants' books and is conducting inspections on randomly selected cases to confirm their accuracy.