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QINGDAO TODAY
在线翻译:
szdaily -> Markets -> 
Firms in US$10b share sale rush
    2020-02-25  08:53    Shenzhen Daily

LISTED Chinese companies are queuing up to issue shares and have already announced plans to raise more than US$10 billion in the past week after fundraising rules were relaxed to help ease cash strains caused by the coronavirus.

More than 50 companies, including Bank of Ningbo and battery maker Yinghe Technology, have published fresh or revised plans to raise as much as 73 billion yuan (US$10.4 billion) through private placements, according to media calculations.

The new rules allow companies to sell shares worth up to 30 percent of their share capital via private placements compared with 20 percent previously. The number of investors allowed to participate in such placements was lifted to 35 from 10.

The changes also make the deals more attractive to investors by halving the lockup periods and enabling more flexible pricing.

The rush to market comes as authorities have been pumping liquidity into the financial system, cutting interest rates as well as easing other funding avenues, in a bid to limit the economic damage from the coronavirus.

The share sales will also be helped by a resurgent stock market. The blue-chip CSI300 has rebounded roughly 13 percent from a low hit Feb. 3 when traders returned after the new year break, compared with 3.8 percent for the U.S. S&P 500 benchmark over the same period.

China cut its benchmark lending rate Thursday, helping lift the tech-heavy ChiNext index to the highest level in almost three years.

“Investors are encouraged by monetary easing, and are looking beyond the epidemic,” said Wu Kan, a portfolio manager at Soochow Securities Co.

“China needs a booming stock market to help channel funding to the real economy.”

Relaxation of the rules comes as a relief to many companies. But the relaxed standards represent a reversal of China’s stance since officials sharply tightened share placement rules following the 2015-16 market crash, where reckless fundraising was seen as a contributing factor.

Private placements raised just 122.9 billion yuan last year from a peak of 1 trillion yuan in 2016, according to Kaiyuan Securities, which expects fundraising via this route to at least double in 2020 from 2019.

(SD-Agencies)

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