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Wednesday, 1 April 2009
China IPO rule for small firms to help boost growth
China is planning to make it easier for small and medium-sized companies to go public, setting up a new trading platform with looser listing rules, and also winning praise from investors and analysts.
China IPO rule for small firms to help boost growth
By V. Phani Kumar, MarketWatch 1 April 2009
(MarketWatch) -- China is planning to make it easier for small and medium-sized companies to go public, setting up a new trading platform with looser listing rules, and also winning praise from investors and analysts.
The move will further the development of its equity markets and give young private enterprises an additional source of funds, said analysts.
The China Securities Regulatory Commission issued the new rules Tuesday governing initial public offerings on the new trading board, to be created on the Shenzhen Stock Exchange.
Under the terms, companies seeking to raise funds via an IPO must have been profitable for two years with accumulated profits of 10 million yuan ($1.46 million).
Those requirements are significant easing from current rules, calling for a profitable record of three years with at least 30 million yuan in profits.
The new rules take effect May 1, clearing the path for the introduction of the much-awaited trading platform, to be known as the Growth Enterprise Market.
“We take the launch of a second board as a long-term positive to the economy, as it provides a much-needed exit mechanism for investors in high growth, small and medium enterprises, and should thus encourage further investments in the SME sector,” Deutsche Bank wrote in a report.
The announcement boosted shares of Chinese brokerages Tuesday on hopes it will expand the number of traded securities and improve trading volumes.
“We believe this also demonstrates [Chinese regulators’] commitment to continued capital market development/reform, which should help investor sentiment on China brokers,” Goldman Sachs wrote in a report. “We believe second-tier brokers such as Everbright and Haitong could benefit more from the launch of the [trading platform].”
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China IPO rule for small firms to help boost growth
By V. Phani Kumar, MarketWatch
1 April 2009
(MarketWatch) -- China is planning to make it easier for small and medium-sized companies to go public, setting up a new trading platform with looser listing rules, and also winning praise from investors and analysts.
The move will further the development of its equity markets and give young private enterprises an additional source of funds, said analysts.
The China Securities Regulatory Commission issued the new rules Tuesday governing initial public offerings on the new trading board, to be created on the Shenzhen Stock Exchange.
Under the terms, companies seeking to raise funds via an IPO must have been profitable for two years with accumulated profits of 10 million yuan ($1.46 million).
Those requirements are significant easing from current rules, calling for a profitable record of three years with at least 30 million yuan in profits.
The new rules take effect May 1, clearing the path for the introduction of the much-awaited trading platform, to be known as the Growth Enterprise Market.
“We take the launch of a second board as a long-term positive to the economy, as it provides a much-needed exit mechanism for investors in high growth, small and medium enterprises, and should thus encourage further investments in the SME sector,” Deutsche Bank wrote in a report.
The announcement boosted shares of Chinese brokerages Tuesday on hopes it will expand the number of traded securities and improve trading volumes.
“We believe this also demonstrates [Chinese regulators’] commitment to continued capital market development/reform, which should help investor sentiment on China brokers,” Goldman Sachs wrote in a report. “We believe second-tier brokers such as Everbright and Haitong could benefit more from the launch of the [trading platform].”
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