Date
25 March 2017
As numerous stock exchanges are competing for IPO business from China tech firms, China’s securities watchdog is said to be mulling a shortcut to keep them in the domestic market. Photo: Reuters
As numerous stock exchanges are competing for IPO business from China tech firms, China’s securities watchdog is said to be mulling a shortcut to keep them in the domestic market. Photo: Reuters

China mulling shortcut to help tech firms list at home

The China Securities Regulatory Commission (CSRC) is reportedly considering a shortcut to allow the largest technology firms — Alibaba Group’s Ant Financial, Zhong An Online Property and Casualty Insurance and security software maker Qihoo 360 Technology Co. — to list at home without queuing for years.

“CSRC would support companies that promote technology innovation and facilitate the country’s economic restructuring to list their shares. The capital market would welcome them with open arms,” said Liu Shiyu, head of the China Insurance Regulatory Commission (CIRC)

About 700 companies are lining up in the initial public offering queue, even though they have already secured listing approval.

It is estimated that it will take three years to complete the process if you are at the end of the queue.

The express lane for tech firms could draw criticism from other companies.

Separately, Yao Zhenhua, chairman of the financial empire Baoneng Group, has been banned from the country’s insurance industry for 10 years, according to a notice issued by the CIRC. Yao was also forced to step down as chairman of the core insurance unit.

Baoneng reportedly controls nearly 500 billion yuan (US$72.22 billion) of assets. The insurer has raised massive amounts of funds through so-called “universal insurance” products, which are relatively short-term policies, and uses the money for hostile takeovers, targeting blue chips like China Vanke Co. (000002.CN) and Gree Electric Appliances Inc. of Zhuhai (000651.CN).

The securities watchdog listed a number of misdeeds in Baoneng’s insurance operations, including improper use of insurance funds and unqualified fund management staff.

Tough penalties will enhance the healthy development of the mainland’s financial market but to root out malpractices over the long run, a more transparent and holistic approach to regulation is needed.

This involves cooperation among different regulatory bodies as reflected by the appointment of Guo Shuqing to head the top banking regulatory body.

Guo, former governor of Shandong province, has been summoned to take over the helm of the China Banking Regulatory Commission (CRBC). He is considered one of the most experienced reformers in the financial services sector.

Guo has served as chairman of China Construction Bank Corp., head of the CSRC and also had a stint in the central bank.

His appointment is regarded as a prelude to the creation of a financial super regulator covering major sectors like the insurance, banking and securities industries.

This article appeared in the Hong Kong Economic Journal on Feb. 27

Translation by Julie Zhu

[Chinese version 中文版]

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RT/RA

Hong Kong Economic Journal columnist

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