IPO-Eager Chinese Companies Await New Regulations

Four months after taking over as China’s top stock market regulator, Xiao Gang showed up at a government meeting in July with flashes of gray hair on his temples. The salt-and-pepper look quickly sparked a debate on China’s Sina Weibo microblog service. Commentators wondered if the challenges of reforming Asia’s worst-performing major stock market had aged him or if he’d simply stopped dyeing his hair. One blogger chimed in with an attempt at poetry:

A-share market keeps falling,
Chairman Xiao’s hair turning white.
Can’t anger the companies,
And the institutions won’t be
disciplined.
Sad, sad, sad.

Xiao, who turns 55 this month, is trying to reconcile conflicting goals: clean up corruption in the nation’s capital markets as President Xi Jinping has pledged, and enable companies to raise money through the stock market. Last October the Chinese government banned initial public offerings because of volatility in the stock market and investor concerns about the financial reporting of newly listed companies. As the chairman of the China Securities Regulatory Commission (CSRC), Xiao is in charge of drafting rules to curb misconduct. The CSRC is also seeking to penalize investment banks that underwrite IPOs of companies that provide false information. Only when the rules are in place will the IPOs of more than 700 companies clamoring to list their shares in the equity market be allowed to resume.