China says to be strict on follow-on fund-raising

China's securities regulator will take a strict stance on approving listed companies' plans to raise new funds in the capital markets, but it has taken no new administrative measures to interfere with such plans, official media reported on Friday.

When reviewing applications for follow-on fundraising from the market, the China Securities Regulatory Commission will consider how necessary the funds are, how feasible the plan is, whether it is in line with regulations, and the market's ability to cope with it, the Shanghai Securities News quoted Xi Longsheng, an official with the regulator's securities issuance approval division, as saying.

Several large fundraising plans by listed Chinese companies, including a multibillion dollar new share issue plan by Ping An Insurance <601318.SS>, have shaken investor confidence and are blamed as a key factor behind a 30 percent slump in China's benchmark share index <.SSEC> since mid-January.

When considering the size and timing of follow-on fundraising, companies should take into consideration the capacity of investors to handle the added burden on the market, Xi was quoted as saying.

"Up to now, we have not taken any administrative measures to interfere with corporate fundraising plans, but we have been informing companies through our communications channels that new issuance and refinancing should not be just to grab money (from the market)," Xi said.