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Finance and Credit
 

IPO issues in the securities market in mainland China

Vol. 21, Iss. 32, AUGUST 2015

PDF  Article PDF Version

Received: 29 April 2015

Accepted: 15 May 2015

Available online: 1 September 2015

Subject Heading: Securities market

JEL Classification: 

Pages: 39-47

Shevchenko D.A. Southern Federal University, Rostov-on-Don, Russian Federation
dashevchenko@sfedu.ru

Khomyakov D.P. Southern Federal University, Rostov-on-Don, Russian Federation
ares909@yandex.ru

Subject The article presents the results of investigation of the China's securities market specifics and modern problems faced by IPO mechanism functioning.
     Objectives The research objectives include identification, analysis and classification of problems in the IPO market of mainland China, their causes and possible solutions.
     Methods We apply systems analysis, statistical analysis, review the empirical data and literature.
     Results The study proves that the Chinese IPO market is unbalanced and has a number of unique problems; government regulation is ineffective and there is no solution to the key problems yet. These problems include delays in issue approval, IPO shares overpricing, and imperfect subscription mechanism. The China Securities Regulatory Commission has to impose a moratorium on the placement of shares; however, it takes no critical decisions to restructure the primary market. The situation requires critical decisions on changing the regulation of the market to develop the IPO market in mainland China and to make full use of its potential. The complex structure of the market and existence of barriers to the IPO of Chinese companies on the most attractive trading platforms are of special importance.
     Conclusions and Relevance Nowadays, the Russian securities market is significantly different from the Chinese one by its size, structure and regulation mechanism. At the same time, the study of the IPO infrastructure and mechanism in China is of great interest due to the need to develop the Russian securities market, identify best practices and advanced instruments for IPO regulation, and prevent potential problems.

Keywords: securities market, initial public offering, IPO, share, securities

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