Mid-August could see resumption of IPOs: insiders

China may end its moratorium on new initial public offerings (IPOs) as early as mid-August, the 21st Century Business Herald reported Wednesday, citing insiders with knowledge of the matter.

These sources also said that regulators may impose special interim measures to cope with the sudden influx of new IPOs likely to hit the market once the floodgates reopen on new public floats. For example, several companies may be allowed to list either simultaneously or in quick succession in order to relieve congestion in the IPO pipeline.

The China Securities Regulatory Commission (CSRC) halted new IPO approvals in July 2012 following widespread criticism that lax supervision over new public offerings had created a glut of poor-quality companies within the equity market. Since then, the CSRC has ordered IPO candidates to reassess the accuracy of their financial disclosures while also launching random auditing inspections of its own - all while keeping new listings in deepfreeze.

Until now, most market watchers had believed regulators would start clearing IPOs again soon after the end of June, when the results of candidates' self-checks and the CSRC's own investigations are expected to be released.

The insiders took issue with such views, saying, "These guesses are too optimistic … According to relevant regulations, after June 30 the CSRC requires IPO candidates to submit their half-year earnings reports. Regulators won't review an applicant until all its documentation is in. Given the time it normally takes to put these reports together, mid-August looks like a more reasonable time for IPO relaunch."

These sources also said that dozens of companies might secure listings within a short period once the lock-out ends. As a precedent, they cited the end of a similar IPO ban in 2009, when about 30 ChiNext candidates went public within a one-month span.

"Opinions are divided on when IPOs will return, but it is commonly believed that the market will see some sort of bulk IPO launch when the time comes," Zhang Xin, an analyst from Guotai Junan Securities, told the Global Times. "Regulators will have to let businesses list together, otherwise it will take years to burn through the offerings backed up within the system. To attract investors, companies will have to tamp down their IPO prices."

According to data from the CSRC, as of May 23, there were 246 companies waiting to list on the ChiNext board, as well as 484 looking to float on main boards or the small- and medium-enterprise board.