China IPOs To Be Back
By the end of the year, China will restore the initial public offerings of local exchanges that were suspended five months ago as part of efforts to address market failure. In summer stock in the country experienced a 40% decline, which wiped 5 trillion. dollars of their value. Imposed in early July ban halted plans stock debut of nearly 600 companies, writes Bloomberg.
Return of confidence
According to a statement of the Chinese financial regulator sheet will be resumed after being introduced improvements in the system. This decision shows that the authorities are becoming more confident in the financial market after the Shanghai Composite index advanced more than 8 percent last week. The indicator rose by 23% compared to this year's bottom reached in August. The lifting of restrictions will also allow Chinese companies to use this important source of funding for contraction of debts, which reached record niva.Saotnoshenieto between debts and assets of the companies traded in Shanghai has reached its highest levels since January 2005. According to estimates McKinsey Global Institute on corporate debt have risen to 125% of GDP last Friday godina.V shares in Shanghai fell slightly because of worries that stock market listings will attract investors already traded companies.
"There will be some damage on the optimism of the market in the short term. But the government must continue with reforms and better leaves will be resumed this year as the market showed some strength," said Ronald Van, head of Hong Kong-based Partners Capital International.Pekin held an unprecedented public campaign to support the stock market, which added to the growing cash incentives for slowing economic growth. Although government support to help return the confidence of local investors, foreign continue to sell shares on the stock exchanges in Shanghai and Hong Kong.
Unlike most financial markets in China regulators control the timetable and cost of new IPOs. Although the authorities to undertake to reduce their control over the process, almost all transactions for the year were made at prices below the 23 times earnings of the company. This limitation leads to almost guaranteed profits after the shares start trading, as it stimulates investors to higher orders for each new listvane.Deset of the 28 companies that were in the process of listing on the ban shall renew process after November 20. For the remaining 18 are expected to do the same until the end of the year.