Sogou, China’s second largest mobile search engine, has taken the first step to launch an initial public offering (IPO) in the United States as early as market conditions permit. The number and dollar amount of American depositary receipts (ADRs) proposed to be offered and sold have not yet been determined, but the IPO’s value could reach as much as USD5 billion. Sogou plans to keep investing in artificial intelligence (AI), big data, and the internet of things (IoT). Baidu is still the No 1 search engine operator in China.

The China Securities Regulatory Commission (CSRC) said that it will maintain a regular pace of approving initial public offerings (IPOs) to help companies raise funds and allow the capital market to better serve the economy. President Xi Jinping has called for the financial markets to better serve the economy and for the expansion of direct financing channels for companies, including stock and bond issuance. China’s two largest stock exchanges in Shanghai and Shenzhen have seen a surge of new listings in the first half of the year at 246, raising CNY125.5 billion, up by 336% year-on-year.

More than 2,800 stocks fell across Chinese markets on July 17 – dubbed “Black Monday” by analysts – with nearly 500 dropping by their daily limit of 10%, as a financial work conference chaired by President Xi Jinping sparked fears that the financial sector will face a prolonged period of increased scrutiny. More than 180 listed companies on the start-up board also warned of significant losses in the first half, including troubled Leshi Internet Information & Technology. Over 1,200 stocks declined by more than 7% on the Shanghai and Shenzhen stock exchanges. Combined daily turnover for Shanghai and Shenzhen soared 48% to CNY570 billion from the previous session. Stocks listed on the Shenzhen exchange, which feature more smaller-cap companies from the technology and consumption sector, suffered the most. The ChiNext Index closed down 5.1% at 1,656.43, the worst level in two and half years. The Shenzhen Composite Index sank 4.3% to end at 1,800.54. The Shenzhen Component Index declined 3.6% to 10,055.8. The benchmark Shanghai Composite Index also fell 1.4% to 3,176.46, the steepest daily percentage drop in more than seven months. “The panic is sweeping across the markets, sparked by a plunge in the start-up board,” said Wang Haijun, Analyst for Shanghai-based Zhongshan Securities. “Financial deleveraging and tightening regulations are not totally surprising news. But the reason the news has dealt such a blow was because it sent a message about the time frame. The financial work conference is held every five years, so markets expect the tightening to last for the next five years,” said Cui Xuetong, Manager for Beijing-based Zhongtou Tiancheng Asset Management.

Investors are piling into Sunac China Holdings, pushing the shares to a record high, ignoring warnings by the world’s three dominant credit rating agencies on the rising default risks caused by its USD9.3 billion acquisitions of Wanda’s assets. Sunac’s shares closed midday on July 14 at HKD16.92, bringing its advance to 15.9% since resuming trade on July 11. However, the gain narrowed by the end of the day, with the stock closing up 1.69% to HKD16.88. “Mainland investors overwhelmingly care about the company’s sales growth and land bank, while heedless of debt and other risks,” said Carol Wu, China Property Analyst at DBS Vickers. “This is in contrast with Hong Kong and U.S. investors, who are concerned with Sunac’s risk side.” Fitch Ratings cut Sunac’s credit rating to BB-, citing what it called the company’s “acquisitive business approach”. The move comes after Sunac agreed to buy hotels, land and theme park projects from Dalian Wanda Group for CNY63.2 billion, in China’s largest property deal.

The number of initial public offerings (IPOs) in China will slow in the second half but the average size will increase, with some large deals in the pipeline, and the 2017 total is forecast to top USD32.4 billion, a PricewaterhouseCoopers report said. IPOs will number 320 to 350 and raise CNY220 billion to CNY250 billion for the full year, and at least CNY100 billion in the second half. That means the average size of iPOs will be larger than in the first half, with the possibility of some mega-sized IPOs before year-end. The main sectors will continue to be manufacturing, consumer goods and services, but the report forecasts an increase in technology, media and telecommunications (TMT), and the games industry. IPOs will gradually slow in the next one to two years. Complicated due diligence rules will also affect the sector, the Shanghai Daily reports.