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China's stock regulator says companies should gauge market before making share sale plans

China's stock regulator says companies should gauge market before making share sale plans

China's stock regulator has warned that companies should take investor demand into account when drawing up plans for raising funds through share offerings, after share prices dropped to a seven-month low.
"Listed companies should consider market conditions, investor sentiment and their own funding needs before deciding the timing and size of refinancing," the China Securities Regulatory Commission said in a statement posted late Monday on its Web site.
China's benchmark Shanghai Composite Index fell 4.1 percent Monday to a seven-month low as investors unloaded shares, fearing that an influx of new shares into the market might pull prices lower in coming weeks.
The comment was made in a question-and-answer "dialogue" between an unnamed journalist and an unnamed CSRC spokesman that refered to plans by Shanghai-traded Ping An Insurance, among other companies, for major share offerings.
Ping An's shares have fallen more than 33 percent since it announced last month that it planned to raise funds through share and bond sales. The company has said it plans to raise up to US$22 billion for acquisitions.
The CSRC official said that Ping An's proposal was still in the planning stages and had not yet been presented to the commission.
Such proposals would be "subject to strict examination, taking into account market conditions, their feasibility and their conformity with regulations and law," the official said.
On Monday, shares in mobile phone carrier China United Telecommunications, also known as China Unicom, fell by the daily limit of 10 percent amid speculation that the company also was planning a share offering.
China Unicom issued a statement Tuesday saying it has no new fundraising plans.
The CSRC's statement stressed that refinancing through share sales is a legitimate and reasonable strategy. But it said the agency would review such plans carefully.
The stock watchdog also said it would crack down on insider trading, price manipulation, falsified disclosures and other abuses _ chronic problems that have also hurt market sentiment.
China's share markets have long struggled with imbalances between share supply and demand.
Prices have faltered with some 400 billion yuan (US$56 billion; euro38 billion) worth of shares held by strategic investors and large shareholders due to become tradable in March, when a series of IPO- or share reform-related lockup periods expire.


Updated : 2021-07-24 10:50 GMT+08:00