Estimated read time: 2-3 minutes
This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.
BEIJING (AP) — China cut the number of initial public offerings planned this month by two-thirds on Friday, adding to frantic efforts to shore up plunging stock prices.
The move was a response to investor fears that a glut of new shares might outstrip demand and depress prices further. It followed another 5.7 percent decline in the country's main market index Friday.
Ten IPOs will be allowed in July, the China Securities Regulatory Commission said on its microblog account.
"Taking into account recent market conditions, the number will be reduced," the agency said. It gave no details of which companies would be allowed to list but said the amount of money raised also would be reduced from June's level.
Some 28 companies — an unusually large number for China — had planned to go public in the next two weeks, according to Hexun.com, a financial news website.
The Shanghai Composite Index soared more than 150 percent starting in late 2014 and hit a peak on June 2 before falling almost 28 percent over the past two weeks. That has wiped out 17 trillion yuan ($2.8 trillion) in market capitalization.
The government announced a surprise interest rate cut on June 27 to shore up investor confidence. As markets slid further this week, regulators reduced trading charges and eased controls on lending for share purchases.
A prolonged slump could disrupt Communist Party plans to use stock markets to make China's state-dominated economy more productive. The party wants state companies to raise money through stock sales to reduce debt and hopes they will compete harder if they answer to outside shareholders.
Party leaders hope stock investing will give an aging populace more options to save for retirement to ease demand for social spending.
The explosive price rise began after the official media said last summer that stocks were cheap. Companies rushed to raise money with share offerings to take advantage of investor enthusiasm.
Beijing wants to encourage broader public stock ownership but appeared to be alarmed by the speed of the price rise. In April, brokers were ordered to curb lending to traders and to limit other risks.
Investor enthusiasm finally faltered in mid-June after stronger economic data reduced expectations Beijing might ease credit further and concern over a glut of new stock offerings.
Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
