China’s market regulator urges tighter IPO scrutiny, cautions against hot money risks 

China’s top securities regulator on Saturday urged underwriters to tighten scrutiny on companies seeking to list their shares, vowing to punish those trying to bring “sick” companies to the initial public offering (IPO) market.

Yi Huiman, chairman of the China Securities Regulatory Commission (CSRC), told a forum that recent China stock market volatility is “natural”, and risks “controllable”, but cautioned against “harmful” foreign hot money flows.

Yi’s comments come amid rising fluctuations in domestic and global stock markets, as well as signs Chinese regulators are tightening the screws on IPO approvals.

“The registration-based IPO system doesn’t mean looser vetting requirements,” Yi said in the speech, which was published on CSRC’s website.

It means providing investors with “investable” companies that have more value, so “requirements on gatekeepers are actually higher,” he said.

China has adopted a U.S-style, registration-based IPO system on Shanghai’s Nasdaq-style STAR Market, and Shenzhen’s start-up board ChiNext, in a bold reform designed to give market a bigger role in evaluating IPO candidates.

But since December, stock exchanges have stepped up IPO inspections, leading to a growing number of companies cancelling their IPO plans.

To justify the move, Yi said that China has the world’s biggest retail investor base of 180 million, so regulators need to make sure listing candidates make full and high-quality disclosures, and comply with China’s industrial policies.

Many underwriters “wear new shoes but walk on the old path,” and they must step up their due diligence and shoulder more responsibility, Yi said.

Commenting on stock market volatility, Yi said that risk is controllable, as current leverage in China’s A-share market is not excessive.

However, he said China should strictly control massive inflows and outflows of hot money, while continuing to encourage normal cross-border liquidity flows.

“For any market, big inflows and outflows of hot money would be detrimental to healthy development, and must be severely controlled,” Yi said.

Reuters 

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.