ANALYSIS-China IPO restart no heavy burden for stock market

* More than 30 companies waiting to list after ban lifted

* Financial, infrastructure companies seen at head of queue

* CSRC to control flow of IPOs to limit market impact

SHANGHAI, May 25 - China's plan to resume initial public stock offers after an eight-month hiatus may push at least 100 billion yuan ($15 billion) in new shares onto the market this year but any impact on the stock market will be short-lived.

While the move shows Beijing's confidence in the sustainability of this year's stock market rally, the China Securities Regulatory Commission (CSRC) is expected to carefully control the flow of issues to prevent a sharp turnaround or counter any signs of over-heating in the market.

More than 30 companies, including Everbright Securities, a top-10 brokerage, China State Construction Engineering Corp, the biggest home builder, and China South Locomotive & Rolling Stock Corp, have won regulatory approval and have been waiting for up to a year to go public after slumping stock markets spurred the government to quietly suspend IPOs last September.

Analysts estimate those companies in the queue alone would raise about 105 billion yuan from equity markets.

"We have no doubt the firms which have already won regulatory approval will have priority to float shares, and the flotation by the end of this year may well exceed that amount," said Zheng Weigang, head of research at Shanghai Securities.

Everbright Securities, China State Construction and China South Locomotive, each planning an IPO of around 10 billion yuan, may receive preference given the government's aims of building up the financial sector and the country's infrastructure, analysts said.

Companies listed outside China that have expressed an interest in floating in Shanghai, such as China Mobile <0941.HK> and HSBC Holdings <0005.HK> <HSBA.L>, are unlikely to get the green light this year given the lack of a regulatory framework, including currency-related hurdles, analysts said.

They also doubted that regulators, who will allow listings to resume as early as next month, would turn on the taps so forcefully as to overwhelm the market's uptrend this year. The benchmark Shanghai Composite Index <.SSEC> has gained more than 40 percent so far in 2009, making it one of the world's top performing indexes.

CONTROLLED PACE

"It seems the CSRC will control the pace, possibly with one or two IPOs a week at the initial stage, if the market does not fall or rise too much," said Cao Xuefeng, senior stock analyst at Western Securities in Chengdu.

The stock market showed little concern about a flood of new equity, with the Shanghai benchmark closing up 0.5 percent at 2,610 points on Monday.

Nor was the resumption of mainland IPOs considered likely to distract from new offerings in Hong Kong.

"The rumour from before was that deals stuck in the A share market would come to Hong Kong but we haven't seen that much crossover," said a Beijing-based investment banker who declined to be named because he was not authorised to speak with the media about the matter.

"In general, the more excitement around Chinese shares, the better for both markets."

Analysts said the early end to the IPO ban, adopted as the Shangahi index tumbled 65 percent last year, may reflect worries about this year's share price rally.

STOCK BUBBLE

"A June IPO resumption would be much earlier than previous market expectations of September, indicating the government is worried about a re-emergence of a stock price bubble after this year's market rally got way too far ahead of the improvement in the economy," said Chen Jinren, senior stock analyst at Huatai Securities in Nanjing.

This year's rise had pushed the average forecast price earnings (PE) ratio of China's 1,600-plus A shares to 29 times as of the time the CSRC published the IPO announcement on Friday.

The PE is still far below a record high around 70 times hit in late 2007, but more than double Hong Kong's 12 times at a time when economic data remains patchy.

China's latest figures for April, while showing a strong recovery in investment, bank loan growth and manufacturing purchasing prices, showed exports, foreign direct investment, industrial output, and consumer prices remained weak.

An informal survey of six fund managers and stock analysts showed they now expect the Shanghai index in coming months to move between 2,410 points, its 60-day moving average, and the psychologically important 2,700 point mark. That suggests its high for the year so far of 2,688, touched last week, would be a near-term peak.

"The IPO news may slow the market's uptrend for now, but it will still be a long-term positive factor," Cao said. "As long as China's economy and corporate earnings can support valuations, the index could test new highs after a period of consolidation."