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Regulator calls for curbs on IPO prices
By Winny Wang |
December 18, 2009, Friday
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Online Edition
Online Edition
CHINA'S securities watchdog today called for improvements on pricing mechanisms to control high values on new shares.
"After the regulator stopped giving instruction in setting initial public offering prices, prices increased further, which indicates that the pricing mechanism is still imperfect," said Shang Fulin, chairman of China Securities Regulatory Commission, today at a financial conference in Beijing.
The commission issued a new rule ahead of the resumption of IPOs in June, saying that the government won't intervene in IPO prices, which will be decided only by the issuer and the underwriter upon negotiation.
The average price/earnings ratio of 17 companies that launched IPOs this month reached a record high of 65.58.
The opening of ChiNext – China's Nasdaq-style board to finance innovative startup firms – contributed a lot to the higher valuation. The average price-earnings ratio of eight ChiNext firms that began subscription this week reached 83.59.
"After the regulator stopped giving instruction in setting initial public offering prices, prices increased further, which indicates that the pricing mechanism is still imperfect," said Shang Fulin, chairman of China Securities Regulatory Commission, today at a financial conference in Beijing.
The commission issued a new rule ahead of the resumption of IPOs in June, saying that the government won't intervene in IPO prices, which will be decided only by the issuer and the underwriter upon negotiation.
The average price/earnings ratio of 17 companies that launched IPOs this month reached a record high of 65.58.
The opening of ChiNext – China's Nasdaq-style board to finance innovative startup firms – contributed a lot to the higher valuation. The average price-earnings ratio of eight ChiNext firms that began subscription this week reached 83.59.
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