An analyst explained that despite the state of China reopening its financial exchanges to initial public offerings, investors prefer new, cheaper stocks that present attractive opportunities.

A Bloomberg report noted that Chinese stocks took a nosedive after the mainland announced that it would be resuming its initial public offerings. The Shanghai Composite Index dipped 1.7% in Tokyo, while MSCI Asia Pacific Index and ChiNext Index lost 0.2% and 8.15 respectively.

According to the securities regulator of China, 50 companies will be set to be listed by the end of January next year. The report said Chinese financial authorities are looking to lift its over one-year ban on new listings.

Jianghai Securities Co analyst Xu Shengjun said, "The IPO plan is dragging stocks down. With new stocks coming that are going to be much cheaper and more attractive, it's ridiculous to want to buy the expensive small-caps."

Bloomberg noted that around 5 company stocks fell for every four that increased in the Asian index on MSCI.

The gauge of Shenzhen-listed companies on ChiNext sank 7.1%, resulting to a paring of the gauge's gain this year to 78%. So far, the Shanghai Composite has decreased to 3.4% this year. The Chinese regulator said on November 30 that over 760 companies are in the queue awaiting approval for an IPO, and that it will take them a year to complete an audit of all IPO applications.

However, the manufacturing sector in China fared well due to a rebound in the sector overall in Asia. According to the news agency, the official manufacturing purchasing managers index was ar 51.4 for the month of November, and had matched the 18-month high reached by the gauge in October. Bloomberg News survey projected a median gauge of around 51.1, indicating that levels that reached above 50 indicate expansion. Moreover, HSBC Holdings Plc and Markit Economics' separate gauge was 50.8, which means the official gauge had topped estimates. HSBC/Markit's manufacturing index for Taiwan and South Korea showed increases, with the countries recording at 53.4 from 53 and 50.4 from 50.2 respectively.