Stock market embraces reform
Stock market embraces reform: "Stock market embraces reform
Chen Hua
2005-11-08 06:13
Foreign strategic investors are now allowed to buy China's tradable A-shares in addition to buying through the incumbent Qualified Foreign Institutional Investors (QFIIs) system, according to a joint announcement issued late last Friday by the Ministry of Commerce and China Securities Regulatory Commission (CSRC).
The new rule, which became effective immediately after the announcement, requires foreign investors to hold a certain percentage of A shares within a certain lock-up period, meaning that they must keep the shares for a limited period of time.
By contrast, there is no lock-up time for buying shares through QFIIs, though the CSRC imposes quotas on the amount of shares available for purchase. The announcement said the two authorities would work out details for this new issue method shortly.
China's stock market is now engaged in a fundamental structure reform to convert two-thirds of its State-owned non-tradable shares to tradable ones.
This share separation was blamed for the four-year market sluggishness that resulted in distorting the price mechanism since the two types of share were offered at differing prices.
Approximately 186 domestically listed companies, whose shares account for about 20 per cent of the market value, have undergone or are currently undergoing reform.
When converting non-tradable shares to tradable ones, the controlling shareholders must ensure they do not float their shares within a certain time period and thus must sell them bit-by-bit in the future.
This rule was enforced to prevent a flood in the market and investor anxiety.
Even with the application of lock-up promises, the newly-floated former non-tradable shares are expected to reach about 200 billion yuan (US$25 billion) next year, much higher than the initial public offerings in a single year in China, said Dong Chen, a research department mana"
Chen Hua
2005-11-08 06:13
Foreign strategic investors are now allowed to buy China's tradable A-shares in addition to buying through the incumbent Qualified Foreign Institutional Investors (QFIIs) system, according to a joint announcement issued late last Friday by the Ministry of Commerce and China Securities Regulatory Commission (CSRC).
The new rule, which became effective immediately after the announcement, requires foreign investors to hold a certain percentage of A shares within a certain lock-up period, meaning that they must keep the shares for a limited period of time.
By contrast, there is no lock-up time for buying shares through QFIIs, though the CSRC imposes quotas on the amount of shares available for purchase. The announcement said the two authorities would work out details for this new issue method shortly.
China's stock market is now engaged in a fundamental structure reform to convert two-thirds of its State-owned non-tradable shares to tradable ones.
This share separation was blamed for the four-year market sluggishness that resulted in distorting the price mechanism since the two types of share were offered at differing prices.
Approximately 186 domestically listed companies, whose shares account for about 20 per cent of the market value, have undergone or are currently undergoing reform.
When converting non-tradable shares to tradable ones, the controlling shareholders must ensure they do not float their shares within a certain time period and thus must sell them bit-by-bit in the future.
This rule was enforced to prevent a flood in the market and investor anxiety.
Even with the application of lock-up promises, the newly-floated former non-tradable shares are expected to reach about 200 billion yuan (US$25 billion) next year, much higher than the initial public offerings in a single year in China, said Dong Chen, a research department mana"
posted by eecalvin @ 10:09 PM
0 Comments:
Post a Comment
<< Home