IPO freeze to end early 2014

China's top securities market regulator said it will lift its freeze on initial public offerings (IPOs) early next year, signaling that a comprehensive reform of the financial market is underway, analysts said Sunday.

China Securities Regulatory Commission (CSRC) said Saturday that about 50 companies, which have received IPO clearance from the regulator, will be able to go public by next January.

China's top leaders vowed in the decisions on comprehensive reform released after the conclusion of the Third Plenum of the 18th Communist Party of China Central Committee that it will carry out significant reform in the financial sector, and push for a market-oriented, registration-based stock issuance system.

Zhao Xijun, deputy director of the Finance and Securities Institute at Renmin University of China, told the Global Times Sunday that ending the moratorium on IPOs is an important step for the CSRC to nurture a fairer securities market without the government's unnecessary intervention.

China shut down its IPO window 13 months ago in order to investigate into fraudulent information disclosures of companies and intermediaries, and also boost share prices in the stock market.

The CSRC said in the guideline that it will put proper information disclosure as a priority of its regulatory efforts, and it will increase the transparency of its review process for companies seeking IPOs.

Zhu Lixu, a Shanghai-based analyst with Xiangcai Securities, told the Global Times on Sunday that the CSRC plans to resume IPO clearance in an effort to increase investors' confidence and enable companies to seek funding.

"Since next year, companies will be able to obtain financing in the primary market, and investors will have more diversified investment options and will no longer to be stuck in the secondary market," Zhu said. "China's current securities market will become more transparent and healthier."

The commission will likely finish reviewing documents of 760 companies that are queuing to get listed in China by the end of next year, it said Saturday in a press meeting. It will make a decision on whether to approve a company to go public within three months of receiving the application, the guideline said, instead of years under the current system.

Chen Yaoxiang, chairman of Gansu Zhongtian Group, told the Global Times Sunday that he submitted an application for listing last June, but finally gave up on the plan this year and is preparing to get listed on an over-the-counter market next February. "My company and my stakeholders cannot wait that long to get financing. That would be detrimental to our business," Chen said.

The CSRC said that it will put protecting small and medium investors' rights at the top of the agenda.

Issuers, underwriters and other intermediaries will be responsible for compensating investors who make losses due to fraudulent statements or major omissions stated in IPO application documents, the commission said.