China IPO freeze will end in two weeks

Press reports indicate that the China Securities Regulatory Commission has granted approval for resumption of domestic IPOs from November 20:

Reuters: China resumes IPOs as stock market revives

NYT: China Plans to Lift Moratorium on I.P.O.s by End of Year

This should increase the likelihood that pending buyouts of US-listed Chinese companies will be completed.

IPO of a Chinese operating subsidiary would be an alternative means by which companies currently listed in the US could access the higher valuations available in China in a way that benefits all current shareholders.  MNC Media will be able to resume its plans to pursue this option and I suggested this option for Jinpan.

The domestic Chinese market shows a huge divergence between weak returns from large cap value stocks and manic performance of speculative small caps:

China Indices 110615

Launching frozen IPOs into a red hot market is likely to result in lukewarm index returns.  This would fit the government’s long-term policy goal of a more professional financial market that can be a vehicle for savings rather than speculation.

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