CSRC should keep foot on IPO brake

The China Securities Regulatory Commission (CSRC) recently announced plans to allow about 100 companies to launch IPOs during the second half, with a roughly equal number of companies set to leave the pipeline each month until the end of the year.

According to the commission, this plan was settled after a careful evaluation of market capacities. As many have observed, China's A-share market is still going through an awkward adolescence - mature investors are still rare, market laws remain weak and speculation continues to be a primary driver of stock fluctuations.

Against this backdrop, regulators should leave room for flexibility in their IPO plans and correlate the pace of new offerings with market conditions. If conditions continue to worsen, the CSRC should consider slowing the pace of stock debuts. With the Shanghai Composite Index wallowing around the 2,000-point mark, a flood of new IPOs could have a serious negative impact on trading sentiment. By the same token, improvements in the market could just as easily create space for more than 100 new offerings.