Hanzhiguo: The fundamental way out of distribution reform is innovations

Hanzhiguo May 22, 2009, the China Securities Regulatory Commission launched a long-awaited reform of the issue of new shares, causing widespread concern in the market. Compared with the way of IPO before the reform, this reform method has taken a small step in the market direction, that is, the original two bids have been changed into a bid, and the way of bidding has also paid attention to the medium and small-sized investors. However, this new issue reform method does not meet the modern market economy under the conditions of the new issue of the simplest and most basic requirements, in essence, is still the original administration-led distribution method of repair and improvement, is not a real reform program. If you use the "new" to describe the reform of the new issue, it can be said that the reform of the new stock issue is not "change", or "soup" is not much.　　The reform direction is not clear, the reform is not strong, the reform measures are not big, it is the most important and basic characteristic of the reform method of the new share issue, and it is also the most important and core flaw of the reform method of the IPO. First of all, the reform of new stock issue has not touched the core and the most essential problem of modern market economy---How to adjust supply and demand relationship. The modern market economy is in essence a kind of economy that determines the price trend by supply and demand. In short supply, prices will inevitably rise, oversupply, prices will inevitably decline, and the adjustment of supply and demand must be determined by the market itself and not by other forces outside the market to decide. One of the most significant flaws in China's stock market since its inception, is that the market itself lacks intrinsic self expansion, self contraction, self coordination and self selection mechanism, administrative mechanism and administrative power control the market supply and demand through the visible and invisible hand, and to a great extent, the stock becomes scarce resources. Because the price of scarce resources is not determined by the supply and demand but by the scarcity of resources, it causes the new shares of Chinese stock market to rise after the issue, making the IPO pricing can not reflect the real situation of the market and the enterprise. To a considerable extent and for quite a long time, the issue of new shares even become management to regulate the stock market chips, in the bull market, in order to suppress the markets, they desperately issued new shares, the higher the stock price, which eventually led to the entire market participants become a hold-up group; The whole market will not be able to get the new shares at a lower price to obtain a premium income. But before the stock market reform in China and the size limit formed after the share reform has become a cancer of Chinese stock market, which brings great hidden danger to the long-term development of stock market. This year in July and October is the size limit of the volume of the lifting of the peak, in the share-splitting reform task is far from complete before the hasty launch of new shares, inevitably will be the formation of additional size limits, and thus to the stock market operation add many important variables.　　The supply and demand of the stock market can not be regulated by the market itself, the Chinese stock market will be far from the real market, the market price formation problem can not really be solved. Secondly, the reform of new stock issuance does not solve the issue of the audit subject of IPO. The Securities and Futures Commission will examine and approve the issuance of sharesCity, this is a special case in the world, and this special cases actually navigate in China for nearly 20 years, and now can not see any clue to solve this problem. The control of the power which was exercised by the stock exchange in the hands of the executive authorities has created a major distortion of the market and market mechanism, and also formed the unique regulatory dislocation of the Chinese stock market, together with the compliance review and the substantive review in the process of approval, which has caused the whole market to rush to executive Also brought a huge rent-seeking space for China's stock market, which is not only a batch of officials in the land of the fat soil of the arrow, but also the Chinese stock market in the running process of the middle layer distorted, in the development of the important source of ups and downs.　　The objective mechanism of the normal operation and orderly operation of China's stock market is difficult to establish when the IPO does not transition from the approval system to the registration system, and the censorship power does not transfer from the CSRC to the exchange. Third, the IPO reform approach even the most basic requirements of the market---by the underwriters and the listed companies themselves decided to market time is not satisfied. At present, the issuance of new shares of the approval is twofold: after the listed companies through the Audit committee, but also to obtain the CSRC's listing approval, either of these conditions are missing, listed companies can not complete the listing process. In other words, the management through the administrative examination and approval, not only master the approval power of the issue of new shares, but also directly control the pace of expansion of the market and the listed company's pace of listing, so that the executive power to the issue of new shares and listing control formed a complete administrative chain, And to a large extent, caused the whole market to the executive branch and executive power of the layer of attachment.　　At best, the process of marketization can only be carried out in the gap of administrative attachment, which is one of the important reasons why China's stock market has been established for nearly 20 years but still cannot get rid of "policy market". According to the above analysis, I think the China Securities Regulatory Commission launched a new issue reform approach does not meet the market's most basic requirements, is a "change" of the improvement rather than reform. The fundamental way out of the reform of IPO is to abandon the old image market of the administration, not so, the Chinese stock market cannot complete the reform task of marketization, the shadow of "policy market" will be lingering. After the market runs to 2,600 o ' clock, management hastily launches such new issue reform and will launch an IPO after June 5, in addition to the urgency of the Chinese stock market's contribution to growth and domestic demand, there may be another layer of policy implication: policymakers already think the stock market is overheating, The market should be cooled by issuing new shares. Whether or not the implication is real, investors should be wary of large market expansion. If the market expands too fast, the market is likely to be back on the long haul as the peak of the non-tradable release is coming.