In the news: Resuming IPOs, Shenzhen's carbon-trading market and Mengniu deal
June 20, 2013 | BY
clpstaff &clp articles &IPOs will not resume until rules from the CSRC have been released. Shenzhen launches the first carbon-trading market in China and Mengniu buys Yashili
IPOs will resume after investor protection rules released
The piece from Bloomberg stated that IPOs would resume in the mainland only after rules boosting investor protection take effect. The news agency cited an official from the China Securities and Regulatory Commission (CSRC) as the source.
The regulator is soliciting public comment on the rules until June 21. The CSRC plans to restrict companies and their major stakeholders from selling stock below the initial public offering price for two years after the lock-up period ends.
The rules are in line with the Commission's commitment to brining transparency to the market and removing fraudulent practices. Since Xiao Gang took over from Guo Shuqing as chairman, he has been carrying on Guo's work, but at much faster pace. Reuters estimated IPOs would resume by July, a possible deadline given Xiao's commitment.
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Carbon market in Shenzhen opens
The Financial Times reported that Shenzhen opened the country's first pilot carbon trading market on Tuesday. Beijing, Tianjin, Shanghai, Chongqing and Guangdong and Hubei provinces are also part of the pilot scheme and will launch their own markets by the end of the year.
The FT suggested that, if the pilot schemes are successful,l this could change China's reluctance to sign international treaties on carbon emissions. The country has resisted participation as it seeks economic progress and shifts blame for climate change onto wealthier, more developed nations.
All the pilot cities had to submit plans to the National Development and Reform Commission (NDRC) for approval. The NDRC has looked upon Shenzhen's favorably. It will be interesting to see which cities launch their markets next and to what extent their approach was different to Shenzhen. If all the schemes are similar, then it defeats the purpose of using pilot cities as testing grounds for a nationwide carbon-trading market.
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Mengniu offers to buy Yashili
Sullivan & Cromwell is representing Mengniu Dairy in its proposed acquisition of Yashili for $1.7 billion. Yashili sources all of its milk from New Zealand. This is the second deal in a month for Mengniu who previously announced a joint venture with French dairy group Danone.
Mengniu is trying to recover from the tainted milk scandal in 2011. The Inner Mongolia-based company saw a net loss of Rmb948.6 million in 2011 because of the melamine scandal. Clearly Mengniu is hoping to buy back its reputation. Food safety is a big issue at the minute and food safety laws are changing in China.
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