SHANGHAI Feb 25 The Shanghai Stock Exchange
will investigate investment funds that purchased excessive
amounts of shares in the recent initial public offering (IPO) of
Foshan Haitian Flavouring and Food Co, the official
Shanghai Securities Journal reported on Tuesday.
The report comes as regulators try to dampen excessive
speculation and curb volatility in the country's IPO market,
which reopened in January after being frozen since late 2012.
Foshan Haitian, which raised 1.9 billion yuan via the IPO,
began trading on the Shanghai exchange on Feb. 11 and spiked on
debut, opening at 61.5 yuan ($10.08) per share and then shooting
up as high as 73.8 yuan at one point.
The bourse was investigating funds that bought large amounts
of shares on the first day of trade in line with regulations,
the newspaper said.
An official at the Shanghai exchange's public relations
department confirmed the newspaper report.
According to the regulation, issued by the exchange in
December, any investment account or group of accounts controlled
by a single investor purchasing 1 percent or more of new shares
listed on the first day of trading will be subject to scrutiny
by the exchange.
The restart of IPOs in China has already proven rocky, with
multiple companies suspending listing plans after being accused
of overpricing their shares to provide generous cashouts for
Securities regulators are also worried that new IPOs will
cannibalise investment funds from other stocks as investors
scramble to climb on board new listings to benefit from sharp
valuation "pops" on the first day of trade, only to dump the
shares a few days later.
($1 = 6.0984 Chinese yuan)
(Reporting by Pete Sweeney and Shanghai newsroom; Editing by
Kazunori Takada & Shri Navaratnam)