IPO reopening positive for Chinese finance: Moody's

Rating agency Moody's said on Thursday that reopening initial public offerings (IPO) on the Chinese stock market is positive for banks, insurers and securities companies.

China Securities Regulatory Commission (CSRC) on Sunday announced a overhaul that will reopen the IPO market after a hiatus of more than a year.

The regulator rolled out new guidance including adoption of a market mechanism to determine price and volume. Measures to protect small investors and improve disclosure were also announced.

Moody's said the developments are "a concrete step toward the diversification and strengthening of the current financial infrastructure."

According to the CSRC, 50 firms may obtain IPO approval as early as January. More than 760 firms are queued for the regulator's nod.

The IPO freeze has led to rapid growth in alternative funding such as trust financing and shadow bank lending.

"Some of these financing products blur the distinction between the risks borne by investors and the risks borne by banks," Moody's said in a report.

"The measures will allow for a more efficient intermediation and allocation of financial risks among economic stakeholders, including banks, other financial institutions and investors," Moody's added.

Chinese banks are expected to directly benefit from the IPO restart.