CHINA'S capital market does not face strong pressure from follow-on share issues and sales of locked-up equities as recent stock drops may dampen fund-raising enthusiasm, the market regulator said in published comments yesterday.

Capital raising activities "are limited to market conditions by a very large extent" and stock issuance won't proceed under a weak scenario, the Shanghai Securities News reported, citing an unnamed securities official.

About 40 listed firms are awaiting regulatory approval for additional stock sales, just one third of the number for the same period last year, the official at the China Securities Regulatory Commission was quoted as saying.

Public companies which have won the nod to issue more stock this year only raised capital equivalent to 20 percent to 30 percent of their approved quota, according to the official. Ping An Insurance (Group), which has proposed to sell 1.2 billion additional shares, has yet to send a final proposal of the massive equity issue to the CSRC for review, the official said.

The benchmark Shanghai Composite Index slumped by more than a third in the first quarter and tumbled below the 3,000-point mark last month on jitters over higher inflation and tight liquidity.

Late last month, the central government dished out a slew of supportive policies, including a cut in stock-transaction stamp duty, restriction on sales of previously non-tradable stocks and approving new mutual funds.

The stock regulator stipulated that major shareholders who want to dispose of more than 1 percent of a listed firm's total stocks must conduct the sale in off-market block trading to prevent affecting existing equities.

About 1.6 trillion yuan (US$229 billion) in stocks, mostly held by state-owned companies in listed firms, started to become tradable this year as their lock-up periods expire, according to industry data. Big shareholders don't simply sell stocks after the lock-up periods end, the official said, adding that they tend to move capital from firms with a gloomier growth outlook to quality chips.

"We hope big investors can place their money in listed companies to help steady the market performance and help it grow bigger. We can't take the end of the lock-up periods as a signal for market cooling," the official said.