China's crackdown on insider trading may slow pace of reform
Regulator stands accused of intimidating some firms into voluntarily suspending flotations
Concerns over insider trading in the mainland's initial public offering market have prompted regulators to tighten controls and Beijing may now be forced to scale back the pace of reform.
Traders say the authorities are concerned the market - which reopened to share sales last month after a 14-month hiatus - is being exploited by connected stakeholders ensuring generous cash-outs for insiders.
The China Securities Regulatory Commission has tightened up rules on pricing for offerings, and also stands accused of intimidating some firms into "voluntarily" suspending their listings, despite verbal commitments to stop meddling in the market.
"This is a total retreat in comparison to other areas of reform in China," said Ding Yuan, professor at the China Europe International Business School in Shanghai who also runs an equities mutual fund.
This is a total retreat in comparison to other areas of reform in China
Ding said that instead of giving markets a "decisive role" as promised, January saw the "most heavily intervened IPO in the history of China". Drugmaker Jiangsu Aosaikang apparently delayed its IPO over concerns the listing was overpriced.
"People may have felt like the IPO wasn't politically correct, but it was totally legal. [Aosaikang] followed the regulations to the letter," Ding said.