China to advance securities market reforms

Updated: 2012-01-10 09:37


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BEIJING - China's top securities regulator said Monday it will advance reforms in 2012 to make the capital market better serve the real economy.

Reforms will be focused on initial public offering (IPO) and delisting mechanisms, bond markets, administrative approval systems and other areas, Chairman Guo Shuqing of the China Securities Regulatory Commission (CSRC) told a conference.

Information about IPOs should be disclosed in a comprehensive, complete and accurate manner and the pricing of IPOs must be closely tied to stock issuers' fundamentals, Guo said.

Reforms of the delisting mechanism should be made to let the stock market better play its role of letting the fittest firms survive, he said.

Chinese investors moaned about excessive IPOs and their high pricing in 2011, when the benchmark Shanghai Composite Index plunged 21.7 percent, placing it among the worst performing stock markets in the world.

Altogether, 282 firms went public on the A-share market in 2011, while 220 listed companies launched re-financing, raising 507.3 billion yuan ($80.3 billion) in total, Guo said.

Individual investors have also been complaining that some companies only take going public as a chance to collect money and that it's difficult for junk stocks to be eliminated from the stock market.

"Substantial measures must be taken to address the overpricing of IPOs and malicious speculation on the shares of poorly performing companies," Guo demanded.

The administrative approval system should be reformed so that priority is given to the role of the market and prior examinations and approvals are reduced, he noted.

All IPOs on the Chinese mainland market must be approved by the CSRC.

Guo also called for stricter regulation on listed companies that have not distributed dividends as promised or have long refused to do so.

Corporate bonds should take a bigger share in direct financing, while research should be undertaken to launch new bond products such as high-yield bonds issued by state-owned enterprises, municipal bonds and agency bonds, he added.

"The capital market should fully use its ability to mobilize resources and innovate to lead resources into fields that are in urgent need of financial support, in order to lay a solid foundation for the healthy development of our economy," according to Guo.