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| New Regulations to Ban Speculative Stock Issues |
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The proposed regulation has scuttled a plan by Financial Street Holding Co to invest capital in new stock subscriptions using capital raised earlier, the Shenzhen-listed firm said in an exchange filing on Wednesday. Public firms will also be prohibited from investing the money they raise from stocks, convertible bonds and upcoming financial derivatives, according to the statement. The funds can be used only as originally planned, such as replenishing working capital to focus on the firms' core businesses, the statement said. A spokesman for the China Securities Regulatory Commission declined to comment on the issue Thursday. Domestic citizens have been diverting bank savings to securities investments in pursuit of higher returns. Many invest in new stocks as mainland firms usually feature staggering trading debuts amid abundant liquidity. So far this year, more than 20 listed companies have used 10 billion yuan (US$1.29 billion) from their stock-sale proceeds to subscribe to IPOs, the Securities Times reported Thursday, citing its own calculation. Chinese authorities are preparing to urge listed firms to beef up information disclosures and adopt new accounting standards as part of efforts to enhance corporate governance. (Shanghai Daily March 16, 2007)
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