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Watchdog backs new issue method

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THE strong reception for a new share allocation system, linking them with bank deposits, has raised hopes that the mainland method of issuing unlimited share subscription forms will be replaced.

The trial method was used last month by Tsingtao Hai'er Refrigerator and Ji'nan Qingqi Motor in their A-share issues for mainlanders, and was highly recommended by Beijing's securities watchdog.

Under the new system, investors deposit a sum of money to a bank which numbers the deposit receipts for lot-drawings.

The lot-drawings decide who get the shares in the companies on offer.

Those who win the right to buy shares via the lot-drawings have money drawn from their accounts, while those who fail have their funds locked in the bank for a certain period, after which they regain access to their money plus interest.

The terms are one year for Tsingtao Hai'er and six months for Ji'nan Qingqi.

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