China resuming IPOs after nine-month suspension

Regulators on Friday lifted a nine-month ban on Chinese initial public stock offerings after markets rebounded in recent months from the plunge that prompted the moratorium.

A small drug maker, Guilin Sanjin Pharmaceutical Co., announced it will become the first IPO of 2009, debuting June 29 in Shenzhen, where the smaller of China's two exchanges is located.

"Now it is a good time for the regulator to lift the ban, since the benchmark has been up so much. The regulator seems to be eager to push this ahead," said Zhang Xiang, an analyst for Guodu Securities in Beijing.

The benchmark Shanghai Composite Index has surged 57 percent since the start of the year, lifted by optimism over the government's multibillion-dollar stimulus spending. It closed Thursday at 2,853.9, its highest since last July 28.

Guilin Sanjin said in an announcement through the Shenzhen exchange that it will issue up to 46 million new shares to raise funds for projects requiring 634 million yuan (NZ$145 million) in total investment.

Regulators are likely to move gradually in allowing more IPOs to test the market's ability to absorb them, Zhang said. Some investors worry that too many new shares flooding into the market will depress prices.

China halted IPOs last September after the Shanghai index tumbled 60 percent from its high the previous year. At that point, 37 companies had received regulatory approval for IPOs.

On Friday, the news of more possible IPOs helped to lift the stock prices of Chinese brokerages in anticipation of more business. At midday, Sinolink Securities Co. had risen by the daily limit of 10 percent while others also were up.

The benchmark Shanghai Composite index was up 0.3 percent in midday trading Friday at 2,863.62.

AP