Analysis
BEIJING – The first batch of 10 shares under the Chinese mainland’s registration-based initial public offering (IPO) system started trading yesterday on the main boards of the Shanghai and Shenzhen stock exchanges.
The move signifies that the authorities have applied the registration-based IPO system across the board, providing solid institutional support for accelerating the building of a standardized, transparent, open, dynamic and resilient capital market.
At a ceremony celebrating the listing yesterday, Yi Huiman, chairman of the China Securities Regulatory Commission (CSRC), said it represents “another landmark of reform and development in China’s capital market.”
The 10 stocks all advanced in yesterday’s trading. Shenzhen CECport Technologies, an electronic component service provider, surged by 221.55 percent, while Dencare (Chongqing) Oral Care gained 173.89 percent.
EFFICIENCY, TRANSPARENCY
Under the registration-based IPO system, stock exchanges will comprehensively evaluate whether applicants are qualified to issue stocks and be listed, and whether they meet the information disclosure requirements.
The CSRC will check the companies’ alignment with the country’s industrial policies and the features of the respective boards. It will help the stock exchanges navigate potential problems during evaluation and make registrations based on the results of evaluations.
The first batch of companies have already felt the changes. They said that under the registration-based IPO system, the regulations and guidelines are more concise and clear, the exchanges’ inquiries are more streamlined and focused, and the company’s major declaration documents and listing review processes are disclosed to enhance audit transparency.
The registration-based IPO reform adheres to market principles, adjusts and improves the pricing and allotment mechanism, and makes it possible for investors to gain a deeper understanding of the listed companies, said Ma Bingbing, chairperson of Zhongzhong Science & Technology (Tianjin) Co., Ltd. The company accounts for one of the five shares that began trading on the main boards of the Shanghai bourse.
The reform aims to improve pricing efficiency, enhance market stability and facilitate investor trading, among other aims, and applies certain trading rules from the science and technology innovation board and the start-up ChiNext board to the main boards, said Gao Ruidong, chief macroeconomist at Everbright Securities.
INFORMATION DISCLOSURE
The central role of information disclosure has been further consolidated under the registration-based IPO system, making the capital market more inclusive and simultaneously strengthening the responsibility of issuers and intermediaries.
Ai Lin, general manager of Zhejiang Haisen Pharmaceutical Co., Ltd., said he felt the responsibility keenly when recalling the company’s listing process on the Shenzhen Stock Exchange’s main board.
“The high-standard information disclosure required by the registration-based IPO system has in turn promoted daily corporate management in a more standardized, systematic and orderly manner,” Ai said.
Xu Feng, director of the investment banking department of CITIC Securities, said he saw that the quality of investment bank practices had been raised to “an unprecedented level.”
“Investment banks need to enhance their value discovery ability further and build bridges for high-quality firms and investors,” Xu said.
Yi said that under the registration-based IPO system, information disclosure is at the core, and regulatory authorities do not judge the investment value of companies but instead ensure proper information disclosure through inquiries and by holding issuers and intermediaries accountable.
The registration-based IPO reform, initiated in 2018, was first adopted by the science and technology innovation board in 2019, and was broadened to the ChiNext board in 2020 and the Beijing Stock Exchange in 2021.
– Xinhua, MPD
