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Expert Warns Speculation in GEM
In the recently held China Ten-year Securities Market Forum, vice director of the Financial Research Center of China Academy of Social Science Wang Guogang said it would be a symbolic event for China to march into the 21st century if China's Growth Enterprise Market (GEM) was launched next year. However, private companies should be alert about the problem of injection by institutional investors before their listings in the GEM.
There is a point view that it will be more conducive to the GEM if institutional investors hold a bigger proportion of the shares than natural persons do in the market. Wang thought this opinion was greatly due to the worry that natural persons would cash out their shares after private companies were listed in the GEM, which would bring severe risks for the market. But through investigation, he said, this kind of natural persons among the planned listed companies in the GEM was not many. On the contrary, it is the institutional investors that are likely to sell their shares and avoid bearing any responsibilities. According to investigation, some institutional investors buy in shares in the listed companies in the GEM through different means and even administrative measures and wish to sell their shares immediately after the locked period.
He warned private enterprises should be careful with such institutional investors before their listing in the GEM.
According to Wang, the beginning of the GEM is very important, which needs cautious operation to insure the steady performance of the market. He suggested to adopt separate issuance and concentrated trading in the beginning of the GEM. If there are too few listed companies in the market, malicious manipulation will easily occur. The most important step is to control the pace of listing and the trading in the market, he said. (Panorama)
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