Investors responded positively to the news that the China Securities Regulatory Commission (CSRC) will be ending the moratorium on initial purchase offerings (IPO) and amending rules for approving companies to trade on stock exchanges. With up to fifty companies reportedly ready to go public by the end of January 2014, investors will have a lot of choice when adjusting their investment portfolios. It is anticipated that the companies approved for IPOs will start the ball rolling and open the way for the almost 800 companies currently waiting for approval to trade publicly.
The moratorium on IPOs was put in place in an effort to support embattled equities, and the benchmark Shanghai Composite, which had lost more than 22% of its value in a three year period, rose around 10% while IPOs were on hold. It remains to be seen how the easing of IPO regulations will impact the stock market index.
The current IPO approval process is time consuming and known to favor state-backed enterprises over privately owned small and mid-sized companies. In future companies will be required to meet basic requirements, including high levels of transparency, and the market will be allowed take its course in evaluating viability and the potential for future earnings of newly listed companies. This update on IPO rules is part of the blueprint for reform formulated during last month’s Communist Party meeting.
In addition to addressing social issues ranging from air pollution to land rights to China's one-child policy, the reform plan includes up to sixty tasks related to economic priorities in the country over the next ten years. The trend will be toward encouraging domestic consumption and innovation, while moving away from an export-driven economy. Investors have welcomed the reform plan, and markets have responded positively. While there are bound to be some hurdles to overcome in implementing the reforms, the general opinion among analysts and investors is that authorities are heading in the right direction for sustaining China's economic growth.
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China's Move to End IPO Halt Sparks Rally in FinanceBloombergChina's move to end a 14-month ban on initial public offerings and allow the sale of preferred shares led to a rally in financial stocks as investors bet the measures will boost fees for brokerages and ease banks' funding. Citic Securities Co. (6030 ...
- China-EU Summit: Green Growth in a Safer World - Editor, Wednesday 20 November 2013
- China's Job Market Faces 'Mismatch' in Skills - Editor, Wednesday 6 November 2013
- Forbes Lists China's Wealthiest People - Editor, Wednesday 23 October 2013
- New Vehicle Sales Soar in China - Editor, Wednesday 9 October 2013
- Shanghai Free-Trade Zone Approved - Editor, Wednesday 25 September 2013
- Rare Earth Element Exports and Stocks Increase - Editor, Wednesday 11 September 2013
- Alternative Energy Developments in China - Editor, Wednesday 28 August 2013
A recent report by China's Ministry of Commerce has noted that foreign investment into China for the period of January to October 2013 experienced an increase of 5.77 percent compared with the same period in 2012. The announcement was made ahead of the China-European Union summit set to start November 21 in Beijing. As the first EU summit with China under the country's new leadership, the agenda will include discussing how best to meet new policy challenges in a fast-changing world, particularly focusing on sustainable development and renewable resources.
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