Across The Border | IPO reform a test of Chinese regulator’s resolve
The CSRC is under renewed pressure after approving an unprecedented 200 debut listings so far this year, undermining the stock market
Initial public offerings (IPOs) have again found themselves at the centre of controversy in the mainland as debate rages over the pace of new share sales.
The heated discussions represent an embarrassment to the securities regulator whose inertia has caused millions of investors to grow weary waiting for long-heralded IPO reforms.
In late May, Han Zhiguo, a Beijing-based economist, fired the first salvo at the China Securities Regulatory Commission (CSRC), lambasting it for the rapid pace of IPO approvals that has undermined the stock market this year.
The most important thing to do is drastically reform the IPO mechanism. The planned reform is sort of being forgotten
The regulator has given the go-ahead to about 200 listing applicants to raise funds on the Shanghai and Shenzhen stock exchanges so far this year, an IPO bonanza that has never been seen before in China. To put that in perspective, there were 280 approvals in the whole of 2016.
On his Sina Weibo account, Han also urged the Communist Party’s anti-graft body to launch an investigation into the CSRC’s procedures for vetting IPO requests.
His criticism was echoed by other economists including Wu Xiaoqiu, a vice-president of Renmin University and renowned financial securities scholar.
“Fast-tracking IPO approvals is not supposed to be a key task,” he wrote in a commentary. “The focus should be on loosening regulations on merger and asset restructuring deals.”