Chinese stock market issues first batch of registration-based IPOs
The first batch of 10 enterprises launching registration-based initial public offerings (IPOs) all saw their stock prices surging on the first trading day.
On Monday, 10 companies became the first to list on the main boards of the Shanghai and Shenzhen bourses under the registration-based IPO system.
This, as a significant step forward in the country's efforts to improve its capital market, marks the beginning of the full implementation of registration-based IPO system in A-shares, a new era for China's capital market.
The new registration-based system, which replaces the old approval-based system, is seen as a more market-oriented approach to listing. This move is expected to improve the efficiency and transparency of the A-share market, and is likely to encourage more companies to list in the coming years.
The 10 companies, with IPO prices ranging from 6.58 yuan (96 US cents) to 44.48 yuan per share, had a combined total of nearly 2 billion shares issued, and posted a total fundraising of 21.2 billion yuan.
As of the closing bell, all 10 companies saw their share prices soaring strongly on the first day of trading.
Shenzhen CECport Technologies Co led the gains with a 221.55 percent increase. Dencare (Chongqing) Oral Care Co and Both Engineering Technology Co closed 173.89 percent and 110.63 percent higher, respectively, while Nanchang Mineral Systems Co, Jiangsu Evergreen New Material Technology Incorporated Company, as well as CITIC Metal Co all rose by over 70 percent.
At the listing ceremony on Monday morning, Yi Huiman, chairman of the China Securities Regulatory Commission, stated that the changes brought by the registration-based IPO system are comprehensive and fundamental.
The issuance and listing system with information disclosure as its core has stood the test of the market, and key innovations in trading, delisting, and other systems have been significant, he noted.
"The service function of the capital market for the real economy, especially for technological innovation, has been greatly improved, and the market structure and ecology have undergone profound changes. The vitality and resilience of the market have been significantly enhanced, bringing real benefits to all participants in the market," Yi said.
Yi pointed out that compared with the approval-based system, the implementation of the registration-based system involves changes in concept, the method of review, transparency, and regulatory enforcement.
Specifically, the registration-based system insists on information disclosure as the core, and regulatory authorities will not judge the investment value of companies. Meanwhile, it holds issuers responsible for information disclosure and intermediaries responsible for oversight.
On transparency, the procedures, inquiries, results, and other information are all made public, with more stringent supervision and balance. While changes in regulatory enforcement include "zero tolerance" for all kinds of illegal and irregular behavior such as fraudulent issuance and financial fraud, and the imposition of administrative, civil, and criminal sanctions form a strong deterrent.
"Practice has shown that the registration-based IPO reform is a change that touches the underlying logic of regulation, an inward-looking change, and a change that affects the overall capital market, with far-reaching implications," Yi said.
Analysts believe the full implementation of a registration-based system will continue to improve the marketization and legalization of the A-share market and boost the long-term bull market. Public funds, as long-term institutional investors, will also play a more active role in the Chinese stock market under the full registration system.