Experts see IPO system enhancing market

The adoption of a registration-based IPO mechanism throughout the A-share market, which was proposed in the annual Government Work Report this year for the first time, will further facilitate the country's technology innovation and deepening of the reform of the Chinese capital market, said industry experts attending the ongoing two sessions.

Jiang Yang, a member of the 13th CPPCC National Committee, the country's top political advisory body, and former vice-chairman of the China Securities Regulatory Commission, said the Chinese capital market is ready for an overall adoption of the registration-based IPO mechanism in all aspects. The mechanism should serve as a major driver of deepened reform of the capital market, he said.

First implemented at the "hardcore technology"-focused STAR Market in Shanghai in July 2019, the mechanism was introduced on the ChiNext in Shenzhen, Guangdong province, a year later. The Beijing Stock Exchange, which was launched on Nov 15 to nurture technologically innovative small and medium-sized enterprises, implemented the IPO mechanism from the outset.

In an interview with Xinhua News Agency at the end of 2021, CSRC Chairman Yi Huiman said the complete adoption of the registration-based IPO mechanism will be a focus of the commission this year.

Yan Feng, a member of the CPPCC National Committee and chairman of Guotai Jun'an Securities, said the registration-based IPO mechanism will further escalate the openness and vitality of the capital market.

More institutions and qualified investors from home and abroad will be attracted so that a wholesome cycle will be built, connecting technology, industries and the capital market, he said.

The country's securities regulatory bodies will attach more importance to information disclosure and investor protection with the implementation of the registration-based IPO mechanism, said Yang Chengzhang, a member of the CPPCC National Committee and chief economist of Shenwan Hongyuan Securities.

"Equity financing will take up a bigger share among all financing channels in China with a complete adoption of the registration-based IPO mechanism. A fundamental change will take place in the capital market: with its scale expanded, structure optimized and system perfected," he said.

Market resources can be thus more efficiently allocated to quality companies with the registration-based IPO mechanism, facilitating technology innovation and the development of emerging industries and high-end manufacturing, said Zhu Jiandi, an NPC deputy and chairman of BDO China Shu Lun Pan Certified Public Accountants LLP.

But public companies' information disclosure should be further strengthened under such a mechanism. While easier access to the market is facilitated, the delisting mechanism should be established at the same time. Investor demand should be also met when companies' financing requirements are met, he said.

Fan Yun, an NPC deputy and vice-chairman of the Shanghai Federation of Industry and Commerce, said that "bottlenecks" in the process of perfecting the registration-based IPO mechanism－for example, intellectual property rights protection－should be addressed as soon as possible. Amendments should be made to related laws and regulations in time to facilitate the wider adoption of the mechanism, she said.

The A-share market has met with downward pressure recently, with the benchmark Shanghai Composite Index shedding 1.13 percent on Wednesday, sliding for the third consecutive day. The Shenzhen Component Index, or ChiNext, also slid.