Restricting IPOs is Bad for China’s Stock Markets, Warns Economist

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China has tightened its grip on the country’s stock market with a set of guidelines, introduced in April

Restricting new share sales and focusing too much on short-term market fluctuations could jeopardize the key reform of China’s initial public offering system (IPO), an economist warned.

“Some believe that as long as the stock market rises and positive measures are introduced, the securities regulator can take any action they like. However, this approach goes against market principles,” said Liu Shengjun, founder of the China Financial Reform Institute, a Shanghai-based think tank.

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Explore the story in 30 seconds

China's tightened IPO guidelines aim to restore investor confidence but risk stifling quality companies and innovation by increasing entry thresholds.
Economist Liu Shengjun warns that focusing on short-term market trends and halting IPOs could negatively impact market reforms, advocating instead for support of a registration-based system.
The National Nine Articles emphasize improving market oversight, but excess regulations may shift China from a liberal market to a restrictive one.

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