SHANGHAI (Reuters) – Plans for initial public offerings (IPOs) in China fell by a third in the first six months of the year, as corporate earnings volatility, a slowing economy and a hardening regulations that have deterred potential candidates.

Chinese authorities accepted around 330 new applications in the first half of the year, up from more than 500 a year earlier, according to available data.

Although Beijing has adopted a registration system designed to let the market decide which companies go public, banks said the process remains largely at the discretion of authorities, who use unwritten rules – based on national security or industrial issues – to make their choice.

Terence Ho, head of China IPOs at EY, attributed the sharp decline in applications between January and June in part to some applicants failing to meet revenue or profit requirements due to China’s economic slowdown.

In addition, “regulators have imposed strict rules and sanctions on sponsors, which makes them more cautious when it comes to supporting an IPO,” said Terence Ho.

More than 100 companies backed out of IPO applications in the first half amid dim hopes of getting a regulatory green light.

Although the total amount of funds raised through IPOs in the Chinese market has decreased compared to last year, it remains the largest globally in the first half of the year.

The Shanghai STAR market, which specializes in high-tech companies, is the one that recorded the largest fundraising with 10.6 billion dollars in the first half (9.7 billion euros). Syngenta, which wants to raise 65 billion yuan (8.2 billion euros), received the green light from the Shanghai Stock Exchange and could be the biggest IPO of the year in China.

(Shanghai office and Scott Murdoch Laetitia Volga, editing by Nicolas Delame)

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