Based on the market statistics released on the website of China Securities Regulatory Commission (CSRC) on Aug. 10, enterprises in the securities market raised a total of 1,617,967 million yuan from the domestic and overseas markets, representing a decrease of nearly 500 billion yuan from the same period of last year and over 30 percent of that of 2016. 116,252 million yuan were raised from the IPO of A shares; 732,473 million yuan were raised from private placements and 32,311 million yuan were raised from the issuing of convertible bonds.
With the efforts of all parties, the capital market maintained stable operation on the whole in the first half of 2017. Its ability of serving real economies was further enhanced and it followed the orientation of serving real economies.
While strictly controlling the access to listed companies, it also maintained normal IPOs. The statistics released by the CSRC show that another 245 A-share companies were listed in the first half with a total amount of 116,252 million yuan. As at the end of June, the market value of stocks of A- and B-share companies increased 2,569.9 billion yuan.
The revision of the rules on the non-public issuing of stocks (private placements) by listed companies also played its role. The private placements reached 732,473 million yuan in the first half, representing slight decreases over the same period of last year. 32,311 million yuan of convertible bonds were issued, representing 1.65 times of that of the same period of last year.
The CSRC introduced further rules on re-financing by listed companies in February, which requires that when listed companies apply for private placements, the allotment and non-public issuing of stocks, the date of the resolution made by the board of directors for the issuing shall be no less than 18 months in principle after the date when the proceeds for the previous issuing were received. But the issuing of convertible bonds and preferred shares and small and rapid fundraising on the ChiNext Board shall not be subject to the requirement. The CSRC adjusted the issuing methods for convertible bonds and revised certain clauses of the regulation on the issuing and underwriting of securities on May 26, which improved the issuing of convertible and exchangeable bonds and changed the current cash subscription into credit subscription. Market participants believe that more listed companies will prefer convertible bonds and it will expand the size of convertible bonds.
The symposium on the national securities and futures regulatory system held in end-July proposed that it will regulate and expand the channels for various capitals flowing into the market and develop long-term institutional investors to safeguard and consolidate the development of the capital market. It will strengthen the review on the issuing quality, maintain normal IPOs, support listed companies to conduct acquisitions and restructuring and improve the de-listing system to give full display to the functions of the capital market. It will expand the two-way opening of the capital market and improve the opening quality to improve the regulation on the system and the ability to serve real economies.
As for the second half, the IPO has been normal since the beginning of the year, indicated Chen Guo, chief strategic analyst at Essence Securities. The CSRC approved 10 IPOs each week in the first five months with an average 5.6 billion yuan raised each week. The space slowed down in June with about 6 IPOs with 3.4 billion yuan each week. The approval of IPOs has become stable. Seven companies were approved to raise no more than 2.8 billion yuan. It is expected that the IPO will remain normal, which will support the ChiNext Board to certain extent.
In addition, it is believed that the supply of convertible bonds depends on the approval by the regulatory authorities. There are still medium- and big-cap convertible bonds waiting for approval. Considering that the issuing of convertible and exchangeable bonds has been changed into credit subscription, the freezing of capitals in the issuing of convertible bonds will result in market fluctuation or plunge. The approval may speed up, which will create conditions for the releasing of the supply of stock convertible bonds.
In the opinions of Aegon-Industrial Fund, the market prefers convertible bonds for the expansion of their objects. The implementation of credit subscription will catch more attention in the market, which will boost the enthusiasm of investors and promote the rapid expansion of the market.
Translated by Star Zhang
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