IPO concerns erase gains in tech shares

A rally for Chinese stocks fizzled as technology and small-company shares plunged on concern the resumption of initial public offerings will lure investors away from the nation's priciest equities.

The Shanghai Composite Index slipped 0.1 percent to 3,604.80 points at the close, erasing a gain of as much as 2 percent. Technology stocks, the best performers this year, posted the steepest loss among industry groups, while the ChiNext Index dropped the most in a month. The small-caps index is four times more expensive than the large-cap Shanghai gauge. Brokerages rallied on speculation a jump in trading since the nation's equities entered a bull market this month will bolster their earnings prospects.

Analysts say traders may sell equities to raise cash to buy IPO shares, whose valuations will continue to be artificially kept down by regulators. A valuation cap has led to nearly guaranteed gains once new shares start trading, spurring investors to place bids worth hundreds of billions of dollars during each round of new listings. The first 10 new stock offerings will lock up as much as 1.3 trillion yuan ($204 billion), according to Australia & New Zealand Banking Group Ltd.