As a result of listing scrutiny, Chinese companies scrap their IPO plans

Under stricter regulations from the securities watchdog regarding share listings in a bear market, companies in China have been rushing to abandon their plans for an IPO this year.

Data from stock exchanges indicated that 47 companies have withdrawn their plans to list on China's stock exchanges thus far this year, as opposed to 29 withdrawals in the same period last year.

With major indexes hovering around five-year lows, the China Securities Regulatory Commission (CSRC), led by new chairman Wu Qing, has taken steps to restore confidence, including asking market participants for regulatory opinions and fining a company for fraudulent listing. These actions coincide with the cancellations.

A CSRC representative also stated on Friday that the watchdog will increase its on-site inspections and that share issuers who commit accounting fraud will be subject to harsh penalties.

When authorities began implementing a phased restriction on IPOs to encourage a "dynamic equilibrium" between investment and financing late last year, China's new share sales — which had previously led the world IPO market by proceeds — started to slow down.

Guotai Junan Securities estimates that 313 firms completed initial public offerings (IPOs) in China last year, raising a total of 356 billion yuan ($49.5 billion). This is a decrease from 424 IPOs and 587 billion yuan raised in 2022.

After the companies asked to withdraw their listing applications, the Shenzhen Stock Exchange last week cancelled the initial public offering (IPO) plans of diagnostics company Fapon Biotech Inc. and appliance manufacturer Ningbo Borine Electric Appliance Co.

Earlier this month, despite the cancellation of the company's initial public offering (IPO) plan in July 2022, Shanghai-based semiconductor company S2C Ltd. was fined by the CSRC for fraud in its listing application.