China’s stock exchanges to facilitate refinancing for listed firms

[BEIJING] The Chinese stock exchanges announced measures on Monday (Feb 9) to facilitate refinancing for “high-quality” listed companies. This is to help them to innovate or expand into new businesses.

The Shanghai, Shenzhen and Beijing bourses said in identical statements that the move represents China’s latest effort to reform its capital markets and promote innovation, and will help to “foster world-class companies” in China.

The listed companies that are trading below their initial public offering price will be able to raise funds, either via private share placements or convertible bond issuance.

The exchanges also pledged to streamline its reviews to make refinancing easier for companies with solid corporate governance, strong disclosure practices and good market recognition.

They noted that the proceeds could be used to fund new businesses and technologies that create synergies, but companies must not blindly diversify their business.

Financing will also be made easier for innovative companies that have few actual assets, but are intensively investing in research and development. But the refinancing process will be strictly scrutinised to weed out the “sick companies”, the exchanges added.

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China’s stock markets are flirting with 10-year highs, and regulators have stepped up their efforts to cool the market.

The official Xinhua News Agency said that the new measures do not mean looser regulations, as preventing risk remains a key task for the stock exchanges. REUTERS