China Bars 139 Funds From IPOs on Tech Board Violations
China Bars 139 Funds From IPOs on Tech Board Violations
(Bloomberg) -- China suspended 139 funds from investing in initial public offerings after money managers breached subscription rules on the country’s new trading venue for technology stocks.
Shenzhen Lin Yuan Investment Management Co., Zhejiang High-Flyer Asset Management Co. and Yingshui Investment Co. were among firms that had multiple funds punished for the violations, with bans of six months or one year, the Securities Association of China said in a statement late Tuesday. The funds made IPO applications on the Star market, which began trading on Monday, that exceeded the size of their investments, the Asset Management Association of China said separately.
The Nasdaq-style trading venue is an experimental market in China that eased limits on valuations and price-swings, increasing the potential for big gains as well as large losses. The more market-oriented approach, together with the hype surrounding the new board, has also brought strict enforcement against rulebreakers.
The bans “show the attitude from regulators to make sure financial institutions are compliant,” with the Star market’s rules, said Wang Jiyue, general manager at Shanghai Pegasus Consulting Co.
Earlier this month, one of China’s biggest brokerages, China Galaxy Securities Co., was temporarily barred from investing its own money in IPOs after the firm’s staff failed to meet a deadline to place orders on the Star market.
Representatives of Shenzhen Lin Yuan Investment Management and Yingshui Investment couldn’t be reached for comment. In an email, Zhejiang High-Flyer Asset Management vowed to improve compliance and said it will return any extra allocation at the offer price while donating profits on these shares to charity.
Twenty-five stocks that comprise the first batch of listings on the new venue rose an average 140% on Monday, though they have since pared their advance. About 23 billion yuan ($3.3 billion) of shares were traded on the Star market on Tuesday, roughly half the previous day’s turnover, according to data compiled by Bloomberg.
To contact Bloomberg News staff for this story: Evelyn Yu in Shanghai at yyu263@bloomberg.net;Amy Li in Shanghai at yli677@bloomberg.net
To contact the editors responsible for this story: Sam Mamudi at smamudi@bloomberg.net, Jeanette Rodrigues
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With assistance from Bloomberg