Listed companies face order to disclose annual financing plans
Beijing is planning to instruct listed companies to disclose annual financing plans in an attempt to quash market speculation on new stock offerings, thus bolstering slumping share prices, mainland newspapers reported yesterday.
The reports come a week after the securities regulator warned companies not to 'maliciously seize money from the market', saying it would 'strictly scrutinise' applications to sell additional shares, which many investors blame for pushing mainland markets to a seven-month low.
'Listed companies should announce their financing needs for the coming year in their annual reports, thus stabilising stock investors' expectations and preventing stock price rumours from causing irrational market fluctuations,' the Securities Times reported, citing sources.
The China Securities Regulatory Commission, which yesterday declined to confirm the veracity of the report, is determined to dissuade companies from making large secondary offerings that will soak up liquidity and hurt the market.
However, shareholders of Ping An Insurance yesterday approved a proposed sale of 1.2 billion shares and convertible bonds to raise as much as 120 billion yuan (HK$131.5 billion) in the A-share market, despite fears it will dilute shareholder value.
Concerns about a share glut remain although Shanghai Pudong Development Bank last week reduced its planned sale of one billion shares to 800 million and China Life Insurance chairman Yang Chao confirmed yesterday that the top insurer had no plans to issue new shares.
The Shanghai Composite Index fell 0.99 per cent yesterday to 4,292.65 points.
According to yesterday's reports, the regulator is likely to tell listed companies to include broad fund-raising targets for the following year when announcing their annual results and then disclose more detailed information about their financing plans as they proceed.
'It is important to have proper standards of disclosure,' said Yi Linming, an analyst at Industrial Securities.
However, other analysts expressed doubts about the feasibility of requiring firms to announce financing plans before possible changes in business conditions.
'It's a step backwards. The regulator should stop meddling and leave market prices for the market to decide,' said Fraser Howie, an expert on the mainland's stock markets. 'This plan would help stabilise the market, but then so would suspending all trading.'
