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China considers legislation to ensure fair IPO prices
By Louise Ho |
May 7, 2012, Monday
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Online Edition
Online Edition
CHINA is considering introducing legislation to eliminate unfair pricing in new share sales, China Securities and Regulatory Commission chairman Guo Shuqing said today.
Speaking at a conference for securities brokerages in Beijing, Guo said: "The regulator will use the strictest measure" to regulate the pricing of initial public offerings.
He said he has nothing against a price-to-earnings ratio of 80 for new shares provided there is an adequate explanation for such a high valuation, adding that the debut price of new stocks has to be reasonable.
IPOs in China are often characterized by high-flying prices and high P/E ratios, which benefit underwriters, brokerages and major company stakeholders, but hurt the interests of small investors.
Since Guo became chairman of the CSRC in October, he has implemented various measures to restore confidence in the stock market. During the Labor Day holiday, Guo introduced four new measures including lower trading fees for A-shares.
Speaking at a conference for securities brokerages in Beijing, Guo said: "The regulator will use the strictest measure" to regulate the pricing of initial public offerings.
He said he has nothing against a price-to-earnings ratio of 80 for new shares provided there is an adequate explanation for such a high valuation, adding that the debut price of new stocks has to be reasonable.
IPOs in China are often characterized by high-flying prices and high P/E ratios, which benefit underwriters, brokerages and major company stakeholders, but hurt the interests of small investors.
Since Guo became chairman of the CSRC in October, he has implemented various measures to restore confidence in the stock market. During the Labor Day holiday, Guo introduced four new measures including lower trading fees for A-shares.
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