China tells banks to pause IPOs to prop up stocks, FT says

China's securities regulator has told investment banks to stop bringing new companies to market and has suspended large share sales by existing shareholders until stocks recover, the Financial Times reported on Tuesday, November 3, citing three people with knowledge of the discussions. The freeze is Beijing's latest attempt to stop a sell-off that gave mainland stocks their worst month in more than a decade.ft.com

According to Reuters Thomson Reuters Corporation ↘ 3.79%, the China Securities Regulatory Commission (CSRC) met with investment banks over the past few days and gave informal "window guidance" rather than a published directive. Reuters said it could not immediately verify the report, and Chinese financial regulators did not immediately respond to requests for comment.reuters.com+1

A sharp October slide

The blue-chip CSI 300 fell 8.5% in October, its worst monthly performance in more than a decade. The decline pushed the index into a bear market and extended its losing streak to a record 12 straight weeks. The CSI 300 is down about 14% so far this year, while the S&P 500 ↗ 2.37% has gained about 10%, according to the FT figures summarized by Bankingnews.bankingnews.gr+2

Taiwan's Central News Agency said the FT described the pause as an addition to guidance issued in October, which included speeding up share buybacks and telling investors to hold off on selling stock.cna.com.tw

Monday's support package

The listing freeze came a day after Chinese regulators announced a set of stabilization measures on Monday, November 2, including swap operations and an upgraded lending facility for stock buybacks. The CSRC, the People's Bank of China and the National Financial Regulatory Administration met with brokerages and fund managers and discussed lowering the buyback relending rate to 1% from 1.25%. The CSRC also said it would allow "protective buybacks" when a stock falls below its offering price, and would encourage 18 newly funded active ETFs to build their positions faster.tokenpost.com+2

Cost to dealmaking

The pause could stall a recovery in equity fundraising. Chinese IPOs have raised more than 292 billion yuan this year, the most since 2023. Chipmaker YMTC, one of the companies expected to list this year, has not yet gone ahead with its offering.chaincatcher.com+1

Regulators have used IPO halts before to cut the supply of new shares during market slumps. The trade-off is the same this time. Fewer listings and fewer large insider sales take selling pressure off prices, but companies have to wait longer to raise money. Officials also have not publicly confirmed any of the guidance, which is being given informally through sources and not in a public directive.chaincatcher.com