{"text":[[{"start":8.72,"text":"Chinese regulators have told bankers not to flood the IPO market with so-called low-quality companies and to keep pricing offerings cheaply amid Beijing’s campaign to boost retail investors’ faith in equities."}],[{"start":21.12,"text":"Chipmaker CXMT and humanoid robotics start-up Unitree enjoyed huge investor interest when they made high-profile debuts in recent weeks. Both stocks soared more than 400 per cent on the first day of trading after being priced lower than they would have been on western exchanges."}],[{"start":38.4,"text":"Officials from the China Securities Regulatory Commission recently met some of the country’s senior investment bankers to reiterate that they wanted this conservative pricing approach to initial public offerings to continue, according to two people familiar with the meetings."}],[{"start":52.74,"text":"They also underlined their desire to avoid a spate of listings, particularly of companies not deemed to be “national champions”, following a surge in applications triggered by the recent IPO successes, said the people."}],[{"start":65.88,"text":"China’s IPO market has roared back this year, with just over 100 listings raising more than $28bn so far — up by almost half compared with the whole of 2025 — according to HSBC analysts. New listings posted first-day median gains of 173 per cent in China this year."}],[{"start":null,"text":"
"}],[{"start":84.6,"text":"The warnings show that Beijing intends to maintain control of the IPO market to meet national goals and encourage people to put more money into the stock market over other forms of investment such as property."}],[{"start":97.08,"text":"Regulators “want to make sure that investors who subscribe to IPO shares can make good gains — that’s how the market keeps going”, said a senior executive at a leading Chinese bank."}],[{"start":106.66,"text":"In the west, bankers usually price listings for a “pop” of about 10 per cent, but different concerns apply in China, where some past listings have fallen sharply after trading begins, hurting retail investors."}],[{"start":119.02,"text":"That has encouraged underwriters and regulators to engineer larger first-day gains."}],[{"start":123.24,"text":"“There is a consensus that the IPO price cannot be too high. It needs to be set a bit lower to leave a large safety cushion,” said the Chinese bank executive. “If a company can be priced at around 30 times earnings, then in reality it might be priced at only 15 times.”"}],[{"start":139.26,"text":"This was particularly true of CXMT, which was valued on a price-to-earnings basis similar to rivals such as Samsung and SK Hynix. As the company sits in a sector crucial to the AI boom, investors still sent the shares about 560 per cent higher than their offer price as of Wednesday."}],[{"start":null,"text":""}],[{"start":158.08,"text":"China has made progress with IPO pricing. A decade ago, almost all deals were priced at a cap of 23 times earnings for listings, often producing sharp swings that left investors vulnerable and share price performance unsustainable in the long run."}],[{"start":172.8,"text":"Since the launch of Shanghai’s tech-focused Star Market in 2019, listings have been priced at different multiples depending on the company and sector. Lossmaking but strategic tech companies can also be valued on sales rather than earnings on the Star board."}],[{"start":188.22,"text":"Bankers say such an approach also allows local government funds and state-owned banks — which usually retain large stakes in companies after a listing — to realise outsized gains on paper and reduce the risk of political criticism that they have failed to preserve state assets."}],[{"start":203.84,"text":"Winston Ma, an adjunct professor at the New York University School of Law and a former managing director at Chinese sovereign fund CIC, said: “A relatively low IPO price set guarantees the listing execution and rewards the long-term state and strategic shareholders who funded these national champions through the hard years.”"}],[{"start":223.64,"text":"He said there had been some “soul-searching” about China’s listing mechanism after post-listing declines in stocks such as Unitree. The robotics start-up fell by almost 50 per cent after the first day’s huge rise, though the stock remains about 240 per cent above the debut price."}],[{"start":239.36,"text":"“It was an extreme supply-demand asymmetry,” said Ma. “In tech debuts where a company carries national-champion hype, like humanoid robotics, but small initial tradeable float, retail FOMO [fear of missing out] creates an unsustainable trading frenzy.”"}],[{"start":253.56,"text":"Regulators have sought to engineer a gradual bull market around the latest wave of technology listings by extending lock-up periods for executives and employees."}],[{"start":262.54,"text":"They are also urging state-backed investors, including local government funds and state-owned banks, to act as “patient capital”, investing in strategically important technologies even before they turn a profit."}],[{"start":273.76,"text":"To build a more stable pricing mechanism, more work needs to be done at the pre-IPO stage, said Xia Chun, founder and chief economist at Chinese financial research group Wiselink."}],[{"start":285.76,"text":"“A healthier IPO market needs a more diverse shareholder base before listing. Founders should not hold too much, and different types of investors should have the chance to battle over the valuation before the company goes public,” he said."}],[{"start":299.68,"text":"“If that balance is there, the stock is less likely to be dumped after listing by major shareholders rushing to cash out, and investors would have a stronger incentive to keep buying and push the shares higher after trading begins.”"}],[{"start":313.28,"text":"Data visualisation by Haohsiang Ko in Hong Kong"}],[{"start":322.4,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1789016362_1386.mp3"}