First wave of Chinese IPOs gets underway

The two Chinese companies that will kick off a new season of initial public offerings (IPOs) in China are set to attract strong investor interest, a good omen for dozens of others lined up to tap stock markets in January after a year-long hiatus.

Signs of strong appetite were already in evidence during the book-building process, which analysts credited with reforms to the way new issues are priced on the mainland.

(Read more: China shares tumble on plans to lift IPO freeze)

Guangdong Xinbao Electrical Appliances and Zhejiang Wolwo Bio-Pharmaceutical, the first two firms to publish IPO pricing targets for planned listings in Shenzhen, were required by the new rules to discard the highest bids.

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IFR, a Thomson Reuters publication, reported Wednesday that Guangdong Xinbao had been forced to toss out all orders over 10.52 yuan per share, which had accounted for 44.5 percent of the total subscription volume.

Regulators hope this new practice, combined with daily limits on IPO price increases, will help prevent the sort of distorted pricing that caused many new listings to open to triumphant rallies, only to quickly fall below the original IPO price and languish there.

(Read more: China's IPO freeze may spur wave of asset sales)

Economists have expressed concern that without fresh funds in the market, the looming flood of new IPOs may dilute overall valuations.

Beijing appeared to address that concern on Wednesday as state media reported that domestic insurers would be allowed to buy shares on the small-cap ChiNext exchange in Shenzhen, where many of the new IPOs will take place, and by encouraging state-owned firms to buy back their own shares, which would offset the dilutive effect of new listings.

China set for record number of IPOs in 2014

Many more IPOs are on the way. Around 50 firms are expected to launch IPOs this month and more than 750 are in the pipeline. A total of around 200 billion yuan ($33.05 billion) is expected to be raised in 2014, twice the amount raised in 2012 prior to the freeze.

The largest new IPO planned so far is the 9.8 billion yuan ($1.62 billion) issuance announced by Shaanxi Coal Industry in Shanghai on Tuesday, which would be the largest IPO in China since 2011, but is half the amount originally planned.

(Read more: China's economic reforms: What you need to know)

Guangdong Xinbao and Zhejiang Wolwo are scheduled to publish details on final fundraising amounts and subscription volumes on Thursday, providing a firmer indication of investor appetite.