China’s new regulation on financing will direct the capital toward the industrial activity, analysts say

Almaty. February 28. Silkroadnews – China Securities Regulatory Commission has recently issued a new regulation on the financing, the newspaper “People’s Daily” reports.

According to the document, the securities subject to the private placement shall not exceed 20% of the company’ joint capital. Second, the interval between the date of the last fund-raising and refinancing should not exceed 18 months. Third, with the application for re-financing, relatively large-scale financing can only be done by the financial institutions. Fourth, the base date of valuation of securities subject to the private placement is the first day of securities issue.

The new regulation by the commission restrains public companies in excessive and frequent financing on the basis of scale, frequency, legal status and securities base value. The new rule is aimed at significant reduction in refinancing scale, the article says.

Stock market analysts have pointed out that a new regulation will allow the public companies to better target financial needs, based on the need of their own development, adhere to the orderly and sustainable funding mechanism and contribute to avoid situations of “idle” funds and waste of resources as a result of funding. Besides, the new regulation is expected to raise the efficiency of resource allocation at the stock market, direct the funds to the production and business activities and will allow the refinancing to boost the economic structure regulation and transformation.