The current method of floating IPO shares has come in for much criticism from industrial officials, emboldening analysts to discuss the possibility of modifications.

But controversy surrounds the possible resumption of IPO sales on the Shenzhen Stock Exchange, which suspended such sales in October 2000 in preparation to host the country's would-be growth enterprise market for high-technology start-ups.

Although Guangdong officials have been urging the China Securities Regulatory Commission to launch the so-called second-board market as soon as possible, what seems most likely now is that the regulator would instead revive IPO share sales in Shenzhen.

An unidentified official of the Shenzhen exchange was quoted by the Securities Market Weekly as saying that there was good chance of listings being allowed on the Shenzhen bourse.

Some foreign media speculated that it could happen in the second quarter of the year.

The nearly three-year IPO drought has put the Shenzhen bourse behind its Shanghai counterpart in terms of liquidity.

A report from Guosen Securities Co showed Shenzhen had lost 469.6 billion yuan (US$57 billion) in trading volume and 1 billion yuan in stamp duty in the period.

"To some extent, the Shenzhen stock market has been marginalized," said Tu Bin of China Southern Securities.

Not all analysts are optimistic about the lifting of the IPO moratorium.

"All the talk now is based on assumptions. We really have no idea which way the securities regulator will go," said Yu Hao, an investment banker from Xiangcai Securities Co. "After a massive shake-up of personnel at the CSRC, I think the new leaders will take a cautious approach to any decision," Yu added.

(Shanghai Daily April 9, 2003)