China Securities Regulatory Commission Reports on New Stock Issuance Pricing
At the first press conference of the China Securities Regulatory Commission in 2024, Yan Bojin, Director of the Issuance Department, discussed the pricing of new shares under the registration system. Bojin stated that the new stock issuance and underwriting mechanism is operating smoothly and that the market-based issuance pricing function is gradually coming into play. However, the phenomena of over-raising and under-raising of new stocks coexist, indicating a competitive game and an issuance ecology of differentiated advantages and disadvantages are taking shape.
In response to the extreme over-funding phenomenon, the China Securities Regulatory Commission and exchanges are insisting on strict supervision, monitoring and restricting abnormal quotation behaviors. They are urging issuers and underwriting institutions to warn of risks, prudently set prices, and investigate and punish violations in the inquiry and pricing process.
The effects of these efforts are noticeable, with the average price-to-earnings ratio of new stock issuances falling back from September to December 2023. Additionally, the ratio to the average price-to-earnings ratio of comparable listed companies dropped significantly, and there was no large proportion of over-funding.
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