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Poor Performers Face Delisting
China's securities regulators Wednesday made good on threats they had been issuing for more than a month when they announced they are willing and able to delist any firm that fails to perform.
A spokesman with the China Securities Regulatory Commission (CSRC) said yesterday that the commission has made preparations to accomplish delisting of any faltering company should market concerns demand it.
The penalty is a new one. Previously, listed firms that failed to post profits for three consecutive years saw their stocks labelled PT (particular transfer) and limited to one-day-a-week trade. In some cases, PT firms that failed to make improvements had been suspended from trading altogether.
Now, according to the CRSC spokesman, PT firms suspended before February 22 will be delisted unless they can provide concrete and practical plans to turn things around in the near future.
Creation of the smooth exit channel will guarantee the quality of listed firms and facilitate rational allocation of market resources, the spokesman claimed.
CSRC issued detailed regulations on February 22 regarding deslisting procedures, saying firms that reported a third straight year of losses could apply to stock exchanges for a six- to 12-month grace period, during which they would be expected to become profitable.
But, despite this warning, investors continued to speculate on PT stocks in the hope that asset restructuring would make them profitable. In some cases, speculation pushed PT stock prices to abnormally high levels.
This time, CSRC's stance is firmer.
The spokesman stressed that existent PT firms and those entering the PT category are high-risk firms. He added that most of them are debt-ridden with poor asset quality and with little hope of making money.
The spokesman further warned that many PT firms face, not only delisting, but bankruptcy as well.
In short, they are not a good place for investors to put their money.
Source: chinadaily.com.cn
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