By Jiahui Huang
China will tighten the supervision of initial public offerings and company delistings with its first guidelines for equities regulation in a decade, part of measures to curb market volatility.
China's State Council on Friday unveiled a host of new guidelines for the stock market, including raising the standards for companies looking for public listings, delisting and stepping up oversight on high-frequency quant trading activities.
The council, updating guidelines for the first time since 2014, also said it will require companies seeking listings to disclose their dividend policies. It will also restrict majority shareholders of all listed companies from trimming holdings if their companies haven't paid dividends in "many years" or have what it described as a low payout ratio.
The China Securities Regulatory Commission released a policy paper on practicing delisting regulations shortly after the guideline. Publicly listed companies can now face delisting if they committed severe financial fraud in one year or have conducted fraud for several years, the policy paper said.
China has experienced an outflow of foreign investment in equities in recent years as the world's second-largest economy grapples with slowing growth, a property-sector downturn and weak consumer sentiment. The benchmark CSI 300 index has lagged behind regional stock markets with a 1.3% gain this year. It slid more than 11% in 2023.
The CSRC has been seeking to boost market stability in recent months, especially after the Shanghai Composite Index fell below the key 2800 level in January. The regulator plans to spend 57.8 million yuan ($8.0 million) this year to enhance law enforcement of illegal market activities such as IPO fraud, financial fraud, market manipulation and insider trading, according to its budget plan posted in March.
"What's more important is the actions, not slogans," ANZ senior China strategist Zhaopeng Xing said.
Write to Jiahui Huang at jiahui.huang@wsj.com
(END) Dow Jones Newswires
04-12-24 0735ET
