Six China groups pull equity IPOs

China's stock market regulator has clamped down on the newly reopened initial public offerings market, highlighting fears about the fragility of investor confidence and dealing a blow to hopes that the market would now be market driven.
Six companies have pulled planned listings just days after the first new share sales in more than a year took place. Five of the companies, which pulled their deals on Monday, all cited Sunday's statement from the regulator that it would strengthen the supervision of IPOs.
The China Securities Regulatory Commission banned new listings for more than a year in November 2012 and worked on redrawing the rules of the market after the Shanghai Composite had dropped almost 40 per cent over the preceding two years.
It announced the reopening of the market at the start of December, saying it would relinquish control of large parts of the process such as choosing which companies could list and demanding to know where their shares would price and who would buy them.
The Shanghai market has dropped by 11 per cent since then and Sunday's "Statement No. 4" from the regulator shows it is still nervous that companies and their brokers will be too aggressive in pricing and sellling new deals, bankers say.
"The CSRC is going to make absolutely sure that new IPOs are not going to hurt the market, they will try and ensure that everyone proceeds extremely cautiously," said one senior Hong Kong-based banker.
The move is a setback for those who believed the CSRC would follow through on its promise to let investors decide what companies were listed at what price. However, the regulator was always going to retain some control by having a veto on proposed listings and setting new rules to stop excessively high pricing of share issues.
The CSRC said it would pay particular attention to companies that were valued more highly than their listed peers and would carry out spot checks on all company roadshows to make sure there was no extra or selective disclosure of information not in preliminary prospectuses.
If a company did want to try to list their new shares with a price-to-earnings ratio that was higher than those of their listed peers, then the company and its underwriters must publish repeated weekly special announcements and warnings of investment risks for at least three weeks before they opened online subscriptions, thhe CSRC said.
Aosaikang Pharmceutical postponed its Rmb4bn IPO on Friday evening after pricing the shares significantly higher than the industry average, although the CSRC denied that it had a hand in the company's decision, according to the Shanghai Securities News, a state-run media outlet.
The five other companies who pulled their deals on Monday citing the new rules were NetPosa Technologies, Hebei Huijin Electromechanical, Nsfocus Information Technology, Beijing Forever Technology and Ciming Health Checkup.
Additional reporting by Julie Zhu

More News From Financial TimesPrivate equity IPOs tempt investors with frequent bounce
Asian private equity uninspired by China IPO thaw
Royal Mail row fails to dim IPO resurgence
Royal Mail float leads IPO resurgence
Chinese regulators give go-ahead to 11 new listings