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New IPO rules better than nothing: expert

By Cong Mu (Global Times)

13:23, February 05, 2013

The ongoing campaign to tighten initial public offering (IPO) approval procedures is not perfect but is better than nothing, Liu Shengjun, a prominent advocate for stock market reform, told the Global Times Monday, after seven more enterprises canceled their applications last week.

The seven firms included six applicants for the growth enterprise market (GEM) in Shenzhen, according to a document published Friday on the website of the China Securities Regulatory Commission (CSRC).

The other dropout was Wuhan-based Sevalo Construction Machinery Group Co, which applied for an IPO on the main board in Shenzhen, another CSRC document showed.

"The tightened procedures cannot truly eradicate the root of the problems in the Chinese stock market," said Liu, who is the deputy director of the CEIBS Lujiazui International Finance Research Center in Shanghai. "However, it's better than nothing" in terms of improving the quality of listed companies.

According to the CSRC documents, as of Thursday, a total of 986 companies are still waiting for approval to get listed in the A-share market, including the GEM. And in 2012, only 176 companies passed the regulatory review procedure, according to statistics from market information provider Zhejiang Hithink Flush Information Network.

In December 2012, the CSRC issued an order requiring the IPO intermediaries to carry out self-reviews to improve their underwriting quality and ensure the veracity of the applicants' financial statements. Brokerage firms must all file self-review reports to the regulator by March 31, or their clients' applications will be terminated automatically.

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