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China’s bold reforms and its deep influence |
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| Release time:2013-12-11 Source:admin Reads: | |
| China is on the crucial period of transition and reform, one of the most surprisingly aggressive items in Beijing’s reform blueprint is a pledge to modernize the country’s new share offering system, a planned-economy-style mechanism that has long been criticized as one of the fundamental deficiencies plaguing an otherwise vast printed flags. Under the current system, new listing aspirants must endure a notorious application process that can take multiple rounds of reviews lasting as long as several years to receive approval from the country’s securities regulator. Once companies secure listing approval, the fate of their IPO still lies within the hands of the regulator. When market conditions are strong, the regulator tends to release the supply of IPOs, often resulting in frenzied buying and excessive pricing due to high demand and rampant speculation. But when investor mood is low, authorities simply impose a moratorium on new listings to avoid further depressing the market. In October 2012, China put in place a de facto IPO hiatus that it has yet to lift despite a queue of more than 750 aspirants awaiting listing approval. Despite the complex and long-term nature of carrying out the proposed printed flags, one immediate beneficiary of the move will likely be China’s securities firms, whose previously lucrative investment-banking operations have suffered from the long drought of new IPO underwriting deals, analysts said. In contrast, under a registration-based system, which is widely adopted in developed economies, companies and investors decide the scale, valuation and timing of new share offerings. In addition, because China’s stock market remains dominated by retail investors, the government may retain some form of oversight over the market to protect less-savvy printed flags, said Amy Lin, a senior analyst at Capital Securities. It takes a long time to establish a viable registration-based system as it requires a high degree of professionalism and ethics among accountants, lawyers and brokers, as well as a group of sophisticated investors,” Ms. Lin added. |
