Markets

Two more Chinese brokerages to launch IPOs

Reuters Shanghai | Updated on January 24, 2018 Published on June 20, 2015

Two medium-sized Chinese brokerages have announced plans to launch initial public offerings, joining one of the country’s biggest securities firms whose subscription period this past week coincided with a sharp correction to China share markets.

Huaxi Securities, based in the southwestern city of Chengdu, said in a draft prospectus it plans to issue up to 700 million domestic shares, or 25 per cent of its expanded outstanding shares, after the IPO.

Dongguan Securities, based in the southern city of Dongguan, aims to issue up to 166.67 million shares, or 10 per cent of the expanded outstanding shares, also in Shenzhen, according to its draft prospectus.

Both tbhe brokerages would use the proceeds to supplement their working capital to expand, they said in prospectuses published late Friday on the Web site of the China Securities Regulatory Commission (CSRC), www.csrc.gov.cn.

The proposed IPOs will need CSRC approval to proceed.

Guotai Junan Securities, China’s third-largest brokerage, this past week had the subscription period for the largest IPO since 2010, aimed at raising raise 30.1 billion yuan ($4.8 billion). It will list on the Shanghai Stock Exchange.

That subscription period came during the worst week for mainland markets since the global financial crisis, as investors worried that an eight-month bull run was running out of fuel.

The market tumbled after the CSRC and other regulators acted to cool red-hot trading, taking measures including allowing more IPOs to divert funds from the secondary market.

The Shanghai Composite index plunged 6.4 per cent on Friday and 13.3 per cent for the week. The Shenzhen Composite Index slumped 12.7 per cent this past week.

Between the end of June 2014 and the middle of this month, the Shanghai benchmark jumped more than 150 per cent, partly propelled by official economic and market reforms. The bull run made Chinese brokerages eager to go public or issue additional shares for expansion.

($1 = 6.2075 yuan)

Published on June 20, 2015
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