China to Allow More Foreign Investment in Listed Firms
Source: Global Times Published: 2020/10/9
The State Council, China's cabinet, released a document on Friday seeking to raise the quality and strength of listed firms, in a bid to sustain the steady growth of the capital market and boost its support for the real economy.
China will allow more qualified foreign investors to make strategic investments in Chinese listed companies, according to the document. Efforts will be made to refine the institutions and rules for the corporate governance of listed companies, improve their information transparency and disclosure, and strengthen the exit mechanism for listed firms, in an effort to enhance the quality of listed companies.
The country aims to attract more long-term strategic foreign investment for domestic firms to improve their management and governance, while also encouraging them to expand overseas so as to help China's homegrown companies grow "big and strong," Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, told the Global Times on Friday.
"This is in line with China's strategy of opening up its capital market in two ways. Listed companies are the cornerstone of the capital market, and as China's capital market grows in quality, more foreign capital will be willing to invest," Dong said.
The China Securities Regulatory Commission (CSRC), China's securities regulator, said late Friday that it sees the improvement of listed companies' quality as the top priority in comprehensively deepening reform of the capital market.
China's capital market has seen robust growth over recent years, with a visible rise in both the quality and quantity of listed companies. By the end of September this year, the number of publicly traded companies in the Chinese mainland exceeded 4,000, with a total market capitalization of over 79 trillion yuan ($11.62 trillion), according to the Xinhua News Agency.
More efforts will be made to enhance the performance of listed companies. Institutions for asset restructuring, acquisition and equity carve-out will be developed and those for refinancing and bond issuance by listed companies will be improved.
Punishment for irregularities such as market manipulation and insider trading will be stepped up, and the transparency and quality of information disclosure by listed companies should improve, according to the document.
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