China CAMC Engineering Co. has become the first Chinese firm to launch an initial public offering(IPO) since the introduction of a new share issuance system on May 18.

The firm, sponsored by state-owned enterprises specializing in international agricultural engineering projects and machinery, plans to issue 60 million A-shares on Shenzhen Stock Exchange, according to a company statement.

The statement said the firm would publish the share price set by institutional investors on June 2, and shares would be available on the market from June 5.

China Securities News described the IPO as the beginning of a new era of the capital market in China, while the Shanghai Securities Journal welcomed the move as a major event in the history of China's capital market.

Under the newly revised Securities Law and Corporate Law, all public shares to be issued domestically will be tradable after a period set by the China Securities Regulatory Commission.

In the past, only about a third of shares of domestically listed companies were floated on the market, and the rest remained under state ownership to ensure the government control of the state-run sector.

Experts said the non-tradable shares, together with poor corporate governance, were to blame for the lackluster performance of China's stock markets during the 2001-2005 period, despite the country's booming economy.

The markets closed flat on Thursday partly because oil giant Sinopec was down by about 2 percent despite the fact that China raised processed oil prices by about 10 percent on Wednesday.

Analysts said many investors cashed in shares in the belief the markets may fall in coming weeks after share prices rose by about 30 percent.

The resumption of IPOs is also blamed for the downward pressure on the markets as new shares would siphon off capital from shares already traded on the markets with investors sell to buy new stock.

The Shanghai A-share Index was up 0.67 points at 1,671.61 on turnover of 22.86 billion yuan (2.86 billion dollars).

Professor Li Yongsen, of the People's University, said the resumption of IPOs would have a negative impact on the stock market in the short term, but would turn favorable in the long run.

Stable and healthy stock markets needed new blood to improve their scale and structure, he added.

Editor: Yan