(Yicai) Aug. 4 -- The Shanghai and Shenzhen stock exchanges did not accept any new initial public offering applications last month. This could be because the listing threshold has been lifted amid a weak macro economy, market participants told Yicai.

It has become more difficult for applicants in some industries to be accepted for review, showing that the IPO threshold seems to have become higher, they said.

Regulators are becoming increasingly cautious when reviewing IPO applications as economic growth slows, an IPO lawyer told Yicai. The last applications to be accepted were submitted on June 30.

But it is normal to have fewer IPO applications accepted in July as it is usually a quiet month for filings, the person said. In July last year two were accepted and in July 2021, three.

“It is hard for small companies and unprofitable tech firms to apply to list at the moment,” an investment banker said. Not only is the market sluggish, but businesses are less able to withstand risks.

“According to my experience, if the average annual revenue of a company applying for an IPO on the main board is below CNY500 million (USD69.6 million), its application will not be accepted,” the lawyer said. “And to apply for an IPO on the Growth Enterprise Market the company needs to achieve net profit of at least CNY50 million (USD7 million) a year.”

Those applying for IPOs on the Shanghai Stock Exchange’s Nasdaq-style Star Market are likely to be turned down if they choose the fifth set of listing standards, which are an IPO channel for startups with leading technologies but have not yet started to generate revenue. Around 20 biomedical companies have already been listed on the Star Market this way, raising CNY42.9 billion (USD6 billion).

And fewer applications were examined in July compared with previous years. Regulators reviewed 25 IPO filings last month, and gave the greenlight to 88 percent of them, according to data from Wind Information. This is almost half the number examined during the same period in 2022 and 2021, at 49 and 47 companies respectively, with approval rates of 96 percent and 85 percent.

More firms are also pulling their applications during the review period. Some 127 companies withdrew their filings this year, compared with 104 in the same period last year and 74 in 2021, according to Wind data.

With more frequent on-site inspections, companies under review face more pressure, the lawyer said. Of those companies that withdrew their applications, some might have been persuaded by regulators to quit.

Editors: Tang Shihua, Kim Taylor