China’s planned easing of rules for initial public offerings across all its exchanges comes with restrictions telling bankers that some firms will need to seek special permission to sell shares.
The China Securities Regulatory Commission on Wednesday unveiled a long-awaited plan to roll out a registration based listing mechanism to all domestic stock exchanges in a bid to fuel access to funding in the nation’s $11 trillion equity market for millions of smaller companies.
The reform builds on rules adopted by Shanghai’s Star board in 2019, Shenzhen’s ChiNext in 2020 and the Beijing Stock Exchange in 2021 and will shorten review periods and ease domestic listings.
The move adds to a decade-long effort to liberalize the stock market just as tensions with the U.S. on trade, technology and audit inspections have been driving more Chinese firms to sell shares at home.
Expediting the listing process and allowing more freedom in setting prices, will likely further propel the country’s IPO market that bucked a global slump last year with a record $92 billion in proceeds.
“The roll-out of the registration reform will enable the capital markets to play a bigger role in supporting the economy,” said Yang Delong, chief economist at First Seafront Fund Management Co. “It also means the domestic share issuance mechanism is gradually becoming mature.” Listings on the main boards of Shanghai and Shenzhen exchanges will still need regulatory approval from the CSRC before the new rules take effect, the watchdog said.
Leaders in investment banking like Citic Securities Co. and China International Capital Corp. are among the biggest winners, according to a GF Securities Co. research.
Full story: https://www.bloomberg.com/news/articles/2023-02-01/china-proposes-ipo-reforms-to-overhaul-11-trillion-stock-market#xj4y7vzkg