In a recent article from Bloomberg, former SFC Chairman and Chief Advisor to the China Securities Regulatory Commission, Dr. Anthony Neoh, QC, SC discusses the impact of the IPO ban on the Chinese markets.
Don’t miss a keynote from Dr. Neoh at the PLUS Hong Kong Professional Liability Regional Symposium, 24 September at the Harbour Grand Hong Kong Hotel. Details and registration are available at the PLUS website.
From the Bloomberg article:
China’s equity market has become “dysfunctional” after the regulator halted share sales and investors shifted to wealth-management products, said Anthony Neoh, a former government adviser who helped the nation open up to foreign money managers a decade ago.
Smaller companies are losing access to capital as the China Securities Regulatory Commission extends a more than nine-month halt on initial public offerings and government-controlled banks focus on lending to state-owned enterprises, said Neoh, who helped start the Qualified Foreign Institutional Investor program as the CSRC’s chief adviser from 1999 to 2004. Many investors assume wealth-management products are guaranteed by the government, creating “tremendous moral hazard,” Neoh said.
The Shanghai Composite (SHCOMP) Index tumbled 42 percent in the four years to yesterday, the worst performance worldwide after Greece’s ASE Index. Investors have liquidated about 2.7 million stock accounts since June 2011 and about 116 million are empty or frozen, regulatory data show. More than 700 companies are waiting to raise funds, according to data compiled by Bloomberg.
“We now have a dysfunctional stock market,” Neoh, who is now part of the CSRC’s international advisory body and a visiting professor at the National University of Singapore, said in an interview in Shanghai on July 30. “The stock market has been starved for funds.”
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