China may reduce the influence of the state on stock markets as part of its sweeping reform agenda, including by making it easier for companies to list their stocks and making management of state-owned enterprises more accountable to shareholders.
In a pointer to a winding back of government influence in IPOs, plans released on Friday included a pledge to ?push forward stock issuance registration system reform? ? a term previously used to refer to the listing process.
In developed economies, the process largely requires a company to register and go through a rigorous audit before investors make a decision on whether or not to buy the stock. To list in China requires the approval of the China Securities Regulatory Commission. An early test of the leadership’s commitment to reform will be if it lifts a year-long suspension of new listings in Shanghai and Shenzhen.
While the stated reason for the de facto ban was to clean up fraud by forcing underwriters review the accuracy of IPO applications, it was widely understood to be an effort to prop up the chronically weak stock market by restricting new shares. Lifting the suspension would be a signal that policymakers are willing to cede more control to markets.
Analysts welcomed the pla-ns, but cautioned they still had to be implemented. “A policy document, however weighty, does not in itself change anything on the ground,” said Mark Williams and Wang Qinwei in a research note.