Two men pass the bronze bull at the Shanghai Stock Exchange.

 
All three of China's A-share stock exchanges have resumed IPO application acceptance, after a hiatus of half a year, which analysts said will greatly bolster investor confidence.

The China Securities Regulatory Commission (CSRC) announced a phased tightening of the pace of IPOs in August 2023.

On Friday evening, the Beijing Stock Exchange accepted IPO applications from three companies, ending a three-month hiatus. On Thursday evening, the Shanghai and Shenzhen stock exchanges each accepted an IPO application, the first for either bourse after a gap of half a year.

Observers said that the resumption will help foster the long-term stability and growth of the A-share market. They also expect the Chinese stock market to be on a stable track this year as investor sentiment improves. 

The long-term investment value of China's capital market will gradually increase, observers said.

This was also the first batch of IPO application acceptances after the release of a sweeping guideline by China's State Council, the cabinet, on April 12. The guideline, the third of its kind, aimed to strengthen regulation, tackle risks and promote the high-quality development of the capital market.

Following the release of the guideline, Chinese securities regulators and stock exchanges on the same day issued multiple notices about regulations in various areas such as IPO applications, delisting of unqualified companies and high-frequency trading.

This is a sign of the IPO process returning to normal, Ade Chen, general manager at Guangzhou-based Fund Investment, told the Global Times on Sunday.

"Such a resumption will lead to a virtuous cycle in the capital market, where some companies are listed while some are delisted," said Chen.

The implementation of the new policies and measures for the financial market will have a positive impact on the development of A-shares during the rest of 2024, and promote the long-term high-quality development of the A-share market, Zhao Haizhou, an associate partner in Deloitte's East China A-share department, said on Friday during a press conference for the release of a report by Deloitte.

In the report, Deloitte estimated that 115-155 new companies will be listed on the A-share market in 2024, with financing reaching about 139 billion yuan ($19.1 billion) to 166 billion yuan.

Some Western media have hyped claims that China is experiencing "the worst IPO exit market in decades," which, together with geopolitical tensions, has forced companies and investors to "look elsewhere for opportunities."

According to public data, offerings on the A-share stock exchanges raised a total of 56.5 billion yuan so far in 2024, down 75 percent year-on-year. During the same period, 52 deals went ahead, down 70 percent year-on-year.

The current slowdown is likely influenced by the CSRC's strategy to prioritize the quality of new listings over the quantity, according to KPMG's Chinese Mainland and Hong Kong IPO Markets 2024 mid-year review, which was released on June 18.

However, this approach, while contributing to the current slowdown, is also expected to bolster investor confidence and foster the long-term stability and growth of the A-share market, read the KPMG report.

Listed companies are an important micro foundation for the high-quality development of the economy, Yang Delong, chief economist at Shenzhen-based First Seafront Fund, told the Global Times on Sunday, explaining why the high-quality development of IPOs matters.

As a step forward, sci-tech firms making breakthroughs in new industries, new business patterns and new technologies will get priority in IPOs, according to new measures rolled out by the CSRC on Wednesday, aiming to further reform the Nasdaq-style sci-tech innovation board of the Shanghai Stock Exchange, also known as the STAR Market.

Analysts pointed out that some A-share IPOs were transferred to the Hong Kong market after the CSRC in late April announced five measures, which included encouraging leading enterprises from the Chinese mainland to list in the Hong Kong stock market.

The number of IPOs in Hong Kong rose 33 percent quarter-on-quarter in the second quarter of 2024, while the capital raised increased by 52 percent, with Chinese mainland-based companies dominating Hong Kong's IPO market in the first half of 2024, according to publicly available statistics.

"There is newfound positivity in the Hong Kong IPO market as evidenced by the surge in IPO applications. This upsurge has been supported by the CSRC's five measures, as well as A-share applicants switching their IPO plans to Hong Kong. 

"In light of these trends, we maintain a positive outlook for IPO activity to pick up in the second half of 2024," said Irene Chu, partner and head of new economy and life sciences in Hong Kong for KPMG China.

Analysts and financial institutions are optimistic about the long-term investment prospects of China's capital market. The nation's robust economy, which is expected to maintain a trend of recovery, driven by supportive policies, will also support the growth of the capital market.

"Recently, a series of policies have been introduced to stabilize economic growth, and capital market reform is also continuing to advance," said Yang.