Internet giants listing abroad prompts China to reform IPO rules  

中國互聯網企業海外市值達2.7萬億 倒逼A股改革

對于互聯網企業而言，選擇去海外上市是“逼不得已”：由于在制度設計和安排上的原因，互聯網企業在A股上市存在天然障礙。實際上，自今年兩會以來，放寬針對未盈利高新技術、互聯網公司的上市條件，已經成為證監會的研究重點之一。[查看全文]

(ECNS) -- Internet firms listing overseas have propelled the Chinese financial market to reform its IPO rules, Economic Information Daily reported.

China's Securities Regulatory Commission (CSRC) said earlier that it's making revisions to the Securities Law to create a fast lane for Internet and scientific startups to get listed.

As five of its biggest Internet companies, Alibaba, JD.com, Tencent, Baidu and Qihoo 360, all looked out of the mainland for IPOs, the mainland financial market has lost $2.7 trillion.

The market value of NASDAQ-listed JD.com has reached $39.8 billion. According to Wind Info, a Chinese financial statistics provider, Hong Kong-listed Tencent Holdings has a market value of HK$1155 billion ($149 billion). Baidu, Inc. and Qihoo 360 Technology Co. Ltd., both having raised funds on the US market, are worth $76.4 billion and $10 billion respectively. China's e-commerce giant Alibaba Group is also gearing up for its first New York IPO with a price range of $66 to $68 per share.

Overseas listings are a loss to domestic investors, with mainland businessmen unable to buy overseas equities, while only the wealthiest are able to buy them indirectly through qualified programs.

"China's IPO rules are outdated and don't fit the needs of newly-emerged industries anymore," said Dong Dengxin at Wuhan Science University.

China's Securities Law stipulates that to get listed, companies must have reported net profits for at least one year. But for most IT firms, losing money in the first couple of years is quite normal. JD.com, listed in May, reported a net loss of 580 million yuan ($93 million) in Q2, 2014.

Although the pipeline for mainland IPOs was reopened late last year after being frozen for a year, companies have to wait in line while the government still makes its own picks. In comparison, the review process is more efficient and market-oriented in the US and Hong Kong.

The CSRC is working on a revision to let startups that are not making money yet transfer to the Growth Enterprises Board after listing on the over-the-counter market for growth enterprises for a full year.

Dong said it's a good interim solution before China adopts a registration system for market-based IPOs.