Investor distrust leads to stock market slump over new listing rule

The securities regulator recently issued a policy that will shorten the listing process of companies from China's western and other less-developed regions. Although the move is aimed at facilitating the development of the less-developed regions, it has sparked a heated debate among experts and ordinary stock investors.

Some experts, such as Xie Baisan, a professor of finance at Shanghai-based Fudan University, have criticized the policy, arguing that it will open the door to the listing of substandard companies, which will be detrimental to investors' interests.

Xie seems to have misunderstood the policy. Odd as it may seem, the China Securities Regulatory Commission policy will not disrupt the normal initial public offering (IPO) rules because enterprises from the poor regions can issue shares only if they meet all the standards of stock listing.