For China's young securities market, reforms are on the way for initial public offerings

An investor keeps a close eye on the stock market in a securities exchange in Qingdao, Shandong Province, on June 25 [Photo / Xinhua]

Chinese portfolio investors may never forget PetroChina Co Ltd's initial public offerings (IPO). On Nov 5, 2007, PetroChina was listed on the Shanghai Stock Exchange as the most profitable company in Asia. Its IPO price was 16.7 yuan ($2.71), but shares opened at 48.6 yuan ($7.88) on the first day of trading. The resplendent financial figures attracted flocks of investors. But two days later, its stock price began its long downturn. The stock price fell below the offering price of 16.7 yuan a year later, and on June 27, its stock price only stood at 7.36 yuan ($1.2).

Chinese securities experts, media and investors at the time blamed China's immature IPO market for causing the stock's nose-dive.

To strengthen the country's stock market, the China Securities Regulatory Commission (CSRC) issued new IPO draft rules on June 7 to collect public opinion until June 21, after which the rules would come into effect and allow for new listings to resume after they were suspended seven months ago.