This photo taken on April 10, 2023 shows the ceremony celebrating the listing of the first batch of shares under China's registration-based initial public offering (IPO) system on the main board of Shanghai Stock Exchange in east China's Shanghai. (Xinhua/Fang Zhe)
BEIJING, April 13 (Xinhua) -- China's stock market saw a new milestone on Monday with the successful listing of the first ten main board companies under registration-based initial public offering (IPO) system.
The move marks the beginning of the highly-anticipated, market-wide implementation of the registration-based IPO system, which is expected to further boost the investment value of the A-share market and make it more attractive to foreign investors.
-- Soaring strongly
As of April 10, the first trading day, all the ten companies saw their share prices surging.
It is reported that five companies including CITIC Metal Co., Ltd. and Zhongzhong Science and Technology (Tianjin) Co., Ltd. debuted on the Shanghai Stock Exchange, while power generator Shaanxi Energy Investment Co., Ltd. joined four others on the Shenzhen bourse.
The ten firms filed their applications on Feb. 20, 2023, the day when it was announced that the registration-based IPO system would be extended to the main board, and it has only taken 49 days from filing to listing.
On the first trading day, the ten shares posted an average rally of 96.52 percent, according to financial data provider Choice. Shenzhen CECport Technologies Co., Ltd. led the gains with a 221.55 percent increase. Dencare (Chongqing) Oral Care Co., Ltd. and Both Engineering Technology Co., Ltd. closed 173.89 percent and 110.63 percent higher, respectively, while Nanchang Mineral Systems Co., Ltd., Jiangsu Evergreen New Material Technology Incorporated Company, as well as CITIC Metal Co., Ltd. all rose by over 70 percent.
The bullish returns of the first batch of companies are within market expectations, said Chen Li, chief economist of Chuancai Securities, explaining that the ten companies are industry leaders with positive growth outlooks.
-- Comprehensive changes
During the listing ceremony held simultaneously in Beijing, Shanghai and Shenzhen on Monday, Yi Huiman, chairman of the China Securities Regulatory Commission, the country's securities watchdog, stated that the changes brought by the registration-based IPO system are comprehensive and fundamental.
Under the new trading rule, the 10-percent daily limit on movement of share prices during the first five trading days was removed, and the limit will come into force on the sixth day.
For shares without price limits, two levels of circuit breakers are set during trading hours. If the trading price increases or decreases by 30 percent or 60 percent compared to the opening price, a 10-minute market-wide trading halt will be triggered.
Yi noted that the issuance and listing system with information disclosure as its core has stood the test of the market, and key innovations in trading, delisting, and other systems have been significant.
The service function of the capital market for the real economy, especially for technological innovation, has been greatly improved, and the market structure and ecology have undergone profound changes, said Yi, adding that the vitality and resilience of the market have been significantly enhanced, bringing real benefits to all participants in the market.
The first batch of companies have already felt the changes. According to the companies, under the registration-based IPO system, the regulations and guidelines are more concise and clear, the exchanges' inquiries are more streamlined and focused, and the company's major declaration documents and listing review processes are disclosed to enhance audit transparency.
The registration-based IPO reform adheres to market principles, adjusts and improves the pricing and allotment mechanism, and makes it possible for investors to gain a deeper understanding of the listed companies, said Ma Bingbing, chairperson of Zhongzhong Science and Technology (Tianjin) Co., Ltd.
-- Revolutionary reform
China has been advancing its capital market through reforms with an aim to build a standardized, transparent, open, dynamic and resilient capital market.
Thanks to the efforts on reforms, such as the registration-based IPO pilot on the science and technology innovation board and the ChiNext board, the merger of Shenzhen Stock Exchange's main board and small and medium enterprises (SME) board, and the launch of the Beijing Stock Exchange (BSE), the country's capital market has gained development momentum.
The registration-based IPO system was first adopted by the science and technology innovation board in July 2019. After four years' pilot, the sci-tech innovation board, commonly known as the STAR market, has established a clear and distinct evaluation system for technological innovation and kept optimizing it to better nurture "hard technology" companies specializing in biomedicine, artificial intelligence or chipmaking. As of April 9, 2023, a total of 513 companies had been listed on the board, with a total market capitalization of over 7.04 trillion yuan.
In August 2020, the system was introduced on ChiNext in Shenzhen where a large number of companies that combine traditional industries with state-of-the-art technologies and business models are traded. As of April 9, 2023, the number of listed companies on the ChiNext board had reached 1,250, with the total market capitalization exceeding 12.72 trillion yuan.
In November 2021, the Beijing Stock Exchange, which was launched to nurture technologically advanced small and medium-sized enterprises, implemented the system right from its inception. As of April 9, 2023, the Beijing bourse had 186 listed companies with a combined market value of nearly 246.8 billion yuan.
China's decision to apply the registration-based IPO system across the board earlier this year will facilitate the multi-tiered capital market system and accelerate the internationalization of the country's capital market.
Foreign investors welcome the registration-based IPO system as it optimizes the listing threshold for various enterprises, bringing more quality investment targets to investors, said Suo Lihui, general manager of Goldman Sachs Gao Hua Securities Co., Ltd.
(Edited by Li Shimeng with Xinhua Silk Road, lishimeng@xinhua.org)
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