Stocks regulator denies IPO resumption rumors

Updated: 2013-06-22 08:26

By Chen Jia (China Daily)

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China's securities regulator said on Friday it will not reopen the expected IPO floodgate, until details of the new share issuance system are released.

"More relevant regulatory measures about IPO issuance and underwriting will be published after we fix the reform policies, and any enterprise waiting to list new shares should get approval from the China Securities Regulatory Commission," said a spokesman for the commission.

The watchdog released a draft about IPO system reform on June 7, and Friday was the last day for collecting public opinions and proposals on the draft.

Local media reports had suggested that new shares could be listed as soon as the end of next month, after some sources close to the CSRC disclosed that the regulator had already revealed details of the reforms to underwriters and asked some institutions to start preparing for the resumption of IPOs.

"The speculated timeline is not correct," said the spokesman. "The CSRC is yet to choose the right time to release the new rules, to ensure a smooth transition."

There have been no IPOs on the mainland since late last year and the regulator has been busy scrutinizing potential listed companies and their financial performances.

IPOs have playing a significant role in the market-oriented reform of China's capital market. The main aim of the reforms has been to cut what many consider as the unreasonably high debut prices, according to the CSRC.

"More reforms will be launched this year," the spokesman added.

The securities watchdog is also expected to release details of an expansion of its new over-the-counter equity exchange system as part of the State Council's goal of accelerating the creation of a multi-level capital market.

It has already been announced that the National Equities Exchange and Quotations - the so-called third board, an equity exchange system for small and medium-sized enterprises - is to expand its pilot sites this year.

The mainland stock market has already been affected by the rumors of an imminent IPO re-start, which some said would leave an already fragile market oversupplied.

The benchmark Shanghai Composite Index has dropped more than 4 percent this week, and ended at 2,073.09 points on Friday, a 27-week low.

The SCI has now declined for three consecutive weeks after hitting 2,300 points at the end of May.

Other downbeat news this week added further pressure to the markets.

HSBC downgraded its prediction on GDP growth to 7.4 percent from 8.2 percent on Thursday, concerned by weakened manufacturing production and a lack of any financial stimulus.

The bank reported a nine-month low for its Purchasing Managers Index, to a reading of 48.3 in June, down from 49.2 in May.

Warnings about tightened liquidity in the interbank system, and the government's determination to continue with its prudent monetary policy, have also bruised investor confidence, analysts said.

The CSRC spokesman said the regulator had taken note of the dramatic falls in major stock prices.

"The market is influenced by complicated factors, including the basic economic situation, market liquidity, and the operational and financial conditions of enterprises," he said.

The commission has pledged to tighten regulations on insider trading and financial fraud by improving the basic laws and regulations, to create a fairer market environment for investors.

Central Huijin Investment Ltd, a State-owned investment company, on Thursday confirmed it had increased its holdings in six financial institutions, including the "big four" State-owned commercial banks.

The company said it will increase investment in exchange-traded funds.

Some analysts viewed Huijin's move as a clear determination to shore up the stock market, however, the CSRC downplayed the investments as "just a common action based on the market situation".

(China Daily 06/22/2013 page9)