INVESTORS in China are faced with the highest number of stocks falling on their first trading day in more than nine years last week, shaking a long-held faith in fat gains on debuts as regulators step up reforms of initial public offerings (IPOs).

Consulting firm Shenzhen Urban Transport Planning Center Co. slumped 7.97 percent as it began trading Friday, taking the number of market debut flops to six last week.

Investors haven’t seen a week with that many negative starts since June 2012.

Buying IPOs in China may be loosing some appeal as financial regulators are taking a closer look at pricing.

Offering prices of many new share sales used to be subject to an unofficial cap of 23 times earnings, limiting fundraising but also allowing most stocks to jump on their debuts.

Even after the curbs were loosened with the registration-based reforms in 2019, investing in IPOs remained a good bet.

However, the Shanghai and Shenzhen exchanges revised rules last month that included a change to how mostly institutional investors place their bids.

The move is aimed at preventing them from putting in similar price quotes to ensure successful subscriptions, what was seen as disrupting the market because the practices could keep the offering price lower than what it should be.

The other five firms that also dropped on their first trading day include vaccines manufacturer Liaoning Chengda Biotechnology Co., which closed its initial session 27 percent lower Thursday after raising more than US$500 million in its IPO.

(SD-Agencies)