China to Lift Ban on IPOs and Reduce Government Control on Markets

The China Securities Regulatory Commission has signaled that it will scale back its control of the market and lift the unofficial ban on initial public offers implemented after Lehman Brothers collapsed in September 2008.  From The Times of India:

China’s securities regulator has indicated it would lift the unofficial ban on initial public offers that came into effect after the collapse of Lehman Brothers last September. It also promised to push through major reforms in the market. It specifically promised to reduce the extent of control it exercises on the market.

The China Securities Regulatory Commission has come out with a consultation paper seeking the views of the industry on a set of measures that include a move to “diminish administrative guidance” in setting prices, it said.

The regulator has been criticized for allowing companies to set share prices at artificially low levels so that they surge up dramatically on the day of listing and bring about an overall feel good atmosphere in the market. This allowed for little role of market forces and the regulator actually played a role in moving prices, the critics say. Retail investors are at a disadvantage while the big players make the most of the existing system, critics say.

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