According to Nippon Capital Asset Management J-LLC, China’s securities watchdog, the CSRC (China Securities Regulatory Commission) announced Friday that it was repealing the ban on new IPOs it imposed at the height of the calamitous stock market crash that wiped 30% of the value of mainland Chinese equities in July.
The aim of the moratorium was to free up liquidity that could be used to shore up values as investors panicked and sold stocks fearing the Chinese economy was slowing faster than the authorities had expected.
Nippon Capital Asset Management J-LLC Executive Vice President and Co-Chief Investment Officer, Charles Worth said the news would help the stock market resume its upward momentum. “It’s positive for stocks because it attracts fresh money into the market. There are nearly 30 companies that had received approval from the CSRC before it introduced the ban – those will now be first out of the starting blocks,” he noted.
Companies in China had raised over $23 billion in IPOs during 2015 before the imposition of the ban – nearly double the $13.2 billion raised in 2014. It was assumed that the sheer volume of cash tied up in impending IPOs had soaked up liquidity that would otherwise have been used to buy stocks already being traded on the two mainland exchanges.
“The mainland indices have rallied by 20% off the lows set back in July and we would expect a continuation of this rebound into the New Year,” said Worth.
The firm says that, as long as the rule changes that allowed insurers and pension funds to increase the proportion of their capital that can be invested in equities remain in force, stocks should remain suitably bid.
About Nippon Capital Asset Management J-LLC
Nippon Capital Asset Management J-LLC is a ‘fee only’ financial advisory service. This way you can be assured that we are acting in your best interests at all times. Other services have ‘special’ relationships with banks and financial institutions, from which they are paid a negotiated percentage of any deals that they broker on their behalf. These third party arrangements distort how investments should be dealt with presenting a clear conflict of interest. We do NOT operate in this manner and offer total commitment to our valued clients, without receiving any compensation from third party sources in the industry.
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Contact Nippon Capital Asset Management J-LLC:
1-1-43, Abenosuji, Abeno-Ku,
Osaka-Shi, Osaka Abenoharukas
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