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The Financial Express

China firms in $10 billion share sale rush as funding rules eased amid virus worries

| Updated: March 12, 2020 14:52:58


China firms in $10 billion share sale rush as funding rules eased amid virus worries

Listed Chinese companies are queuing up to issue shares and have already announced plans to raise more than $10 billion in the past week after fundraising rules were relaxed to help ease cash strains caused by the coronavirus, according to Reuters.

More than 50 companies, including Bank of Ningbo and battery maker Yinghe Technology, have published as of Thursday fresh or revised plans to raise as much as 73 billion yuan ($10.4 billion) through private placements, according to Reuters calculations.

The new rules allow companies to sell shares worth up to 30% of their share capital via private placements compared with 20% previously. The number of investors allowed to participate in such placements was lifted to 35 from 10.

The changes also make the deals more attractive to investors by halving the lock-up periods and enabling more flexible pricing.

The rush to market comes as China has been pumping liquidity into the financial system, cutting interest rates as well as easing other funding avenues, in a bid to limit the economic damage from the coronavirus that has killed over 2,000 people and stalled many business activities.

The share sales will also be helped by a resurgent stock market. The blue-chip CSI300 .CSI300 has rebounded roughly 13% from a low hit on February 3 when traders returned after the new year break, compared with 3.8% for the U.S. S&P 500 .SNP benchmark over the same period.

China cut its benchmark lending rate on Thursday, helping lift the tech-heavy ChiNext index .CHINEXTP to the highest level in almost three years.

“Investors are encouraged by monetary easing, and are looking beyond the epidemic,” said Wu Kan, a portfolio manager at Soochow Securities Co.

 

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