Factors for capital markets growth

1. What have been some of the key legislative changes affecting China's capital markets over the past 12 months How did these developments clarify issues with current legislation

In addition to the amendments to the Company Law at the end of 2013, what has perhaps had the greatest direct impact on China's capital markets has been the reform of the new share offering system initiated at the end of 2013, which has been continuously intensified and made more extensive since then, with the revision of the Tentative Measures for the Administration of Initial Public Offerings of Shares and the Listing Thereof on the Growth Enterprise Market and the promulgation of the Tentative Measures for the Administration of the Offering of Securities by Companies Listed on the Growth Enterprise Market in May this year being one of the specific manifestations of this.

The reform of the new share offering system places information disclosure at the heart of the offering review system, further improves the pricing mechanism for new share offers and intensifies law enforcement. It narrows the distance for converting between the different offering review systems, the road that must be taken to move from the check and approval system to the registration system, and the reform of the new share offering system addition­ally provides practical support for the next step in the revision of the Securities Law.

2. Have this year's Measures for Strengthening the Regulation of Offerings of New Shares succeeded in increasing transparency in the IPO process

The Measures for Strengthening the Regulation of Offerings of New Shares (the Measures) emphasise that the prospectus should serve as the sole standard for information disclosure, strengthen the risk warnings for pricing at higher than the industry average price-earnings ratio and raise the bar on the requirements in respect of the qualifications of investors participating in price inquiries.

With respect to the fairness, transparency and impartiality of the process for pricing offers, the Measures further provide safeguards that will be conducive to enhancing the transparency of the pricing of new share offerings, enhancing offering efficiency and ensuring the success of offerings.

3. What are the big Chinese IT companies looking for in a stock exchange

The main factors that large Chinese IT companies consider when selecting an exchange can be summarised as follows:

• a vast securities market and abundant sources of funds: the stability of the securities market where the exchange is located and the abundant sources of funds that it represents are the primary reasons why big Chinese IT companies list and seek financing on a specific exchange, as a stable securities market and abundant fund sources provide the greatest opening for corporate financing;
• a legal and policy environment that facilitates refinancing: whether the legal and policy environment of the country or region where the exchange is located encourages or facilitates refinancing for listed companies is another factor that Chinese IT companies will consider when selecting an exchange to list on;
• strengthening of corporate M&A ability: many Chinese IT companies have post-listing continuing strategic investment and acquisition arrangements. This means that whether the stocks listed on a certain exchange are recognised, whether the legal and policy environment of the country or region where the exchange is located encourages the carrying out of acquisitions, etc. are factors to which Chinese IT companies give great weight when selecting an exchange on which to list; and
• maximisation of the personal benefits of management: whether maximisation of the benefits of management can be accomplished also commonly features as one of the important factors considered when a Chinese internet company selects an exchange.

In addition to the foregoing, other factors that are considered include whether the securities regulatory laws of the place where the exchange is located are conducive to promoting internal reform of Chinese companies and enhance their corporate governance level, and whether listing on a specific exchange will assist in enhancing the company's degree of recognition and good reputation globally.

4. What are some of your experiences and strategies for the IPOs that you are working on

Firstly, an issuer should select, for financing and listing, a securities market that is compatible with its own enterprise's and the industry's growth, while taking into consideration its own level of development and philosophy and the characteristics of the market (e.g. domestic markets and foreign markets each have their particularities, advantages and disadvantages). It needs to make its selection and determination based on the enterprise's own circumstances.

Secondly, the level of the intermediary firms plays an extremely important role in determining the success of an issuer's offering and listing. Accordingly, when selecting an intermediary firm, an issuer should be cautious, and not simply just consider the price factor. The track record of the main firms, the experience and expertise of the handling personnel, etc. are also important factors requiring consideration.

Thirdly, the issuer should strictly observe the laws of the place where it will list and the listing requirements of the exchange, disclose all of the information it is required to disclose, entrust specific issues to the judgment of professional intermediary firms and avoid the series of potential risks that could arise if its information disclo­sures fail to satisfy the requirements of truthfulness, accuracy and completeness.

5. What are the most common challenges you encounter during IPOs in general

The frequently interrupted review schedule of the CSRC. This causes a large backlog of enterprises stuck in the review procedure, making it impossible for issuers to satisfy their financing needs, causing funding pressures in their normal business operations and making it impossible for their production and business plans to match their anticipated funding schedules. The normal operations of such enterprises have been significantly affected.

The CSRC's criteria for IPO reviews is not completely public and transparent. It contains a certain degree of arbitrariness and subjec­tivity, with the issuers and the various intermediary firms exhausted from responding to the various questions, often as the Chinese say “cutting the foot to fit the shoe” but achieving the opposite of what was expected.

Under the current review regime, the odd issuer may withhold certain important facts with an eye to smoothly sailing through the offering review, posing grave professional risks for the intermediary firms, including the law firms, involved.

6. What are the major problems and concerns issuers might have with both onshore and offshore listings and how do you address them

The first problem is the regulatory environment and policies: regardless of whether a listing is to be made in China or abroad, whether, in the place of listing, regulation is rigorous and whether the listing environment is accommodating are some of the primary factors considered by issuers.

The second is the degree of market recognition. Although the listing of an issuer is a capital operation, the publicity angle should not be underestimated. There is no need to dwell at length on the China market, but the degree of recognition and understanding of Chinese enterprises in offshore markets is vastly different. Accord­ingly, the market's degree of recognition of the industry in question and the enterprise in question is an issue that an issuer must think over when considering listing onshore or offshore.

7. How is the connection between the Hong Kong and Shanghai stock exchanges beneficial to both markets

The Shanghai-Hong Kong Stock Connect is an important aspect of the opening of domestic capital markets to foreign investment, which is conducive to strengthening the association between the two capital markets, driving the bi-directional opening of the capital markets and has a positive significance for many aspects of the development of the two capital markets.

Firstly, the connection will diversify investment entities and improve the price discovery mechanism. After the initiation of Shanghai-Hong Kong Stock Connect, the competing environment in China's capital markets will undergo a fundamental change. Investors will not only be competing against the various types of investment entities in China, but also against the various types of investment entities in foreign markets; not only against a virtual economic envi­ronment, but even more against the real economic environment. This is a process of investment diversification, profit model diversifica­tion and arbitrage mechanism diversification for the various types of investment entities. This will lead to the gradual disappearance of the phenomenon of investors flocking and converging on a certain subject for investment, allowing the securities markets to genuinely recover their function of resource allocation and price discovery and fostering and realising a “transparent, fair and impartial” securities market environment characterised by good faith.

It also provides a golden opportunity for market regulatory coop­eration and the promotion for the development of listed companies. After the initiation of Shanghai-Hong Kong Stock Connect, domes­tically listed companies will utilise the Shanghai-Hong Kong Stock Connect investment targets as benchmarks to strengthen their corporate image building, strengthen management of market value, standardise the mechanism for valuation of the companies and promote the transformation and upgrading of the companies. This will not only satisfy the development needs of the domestic economy, but also give rise to a business environment that favours long-term investment and value investment, drive the pace of business innova­tion of domestically listed companies, and investor returns will rise to a new level, thereby, to an extent, creating an opening for domesti­cally listed companies to rise to international levels.

This also makes a step toward greater internationalisation and expanding the influence of the two capital markets. On the one hand, Shanghai-Hong Kong Stock Connect will be conducive to consoli­dating Shanghai's and Hong Kong's statuses as financial centres and, on the other hand, for companies listed domestically, it will make acquisitions and restructurings that take aim at international markets possible. After the initiation of Shanghai-Hong Kong Stock Connect, the feelers of domestically listed companies may extend toward inter­national markets. Through strengthening and expanding their capital domains, listed companies with relatively robust capital strengths and growth prospects will be able to use their own distinctive market value, management means and core business competitive advantages to take control of pricing rights in international markets, thereby assisting A shares in creating a globalised capital market image.

8. What do Chinese regulators need to do in order for the stock market to pick up and restore investors' confidence

The liquidity of a market is an indicator of its degree of activity and is the foundation for a market to play its role of allocating resources. The liquidity of a market is reflected in the number of entities participating in trading, the speed with which participating entities enter and leave the market and the speed with which information is exchanged in the market, and capital markets are no exception. Based on the foregoing understanding, it is our belief that the activity of capital markets can be strengthened and the confidence of investors restored correspondingly from two aspects: (1) steadily moving forward with the revision of the Securities Law, implementing the registration system for securities offerings, strengthening information disclosure, encouraging newly listed companies and allowing investors to make use of their value determination advantages on the basis of information symmetry; and (2) further implementing the delisting system on the basis of protecting small and medium investors and encouraging restructurings and acquisitions in the capital markets so as to allow investors to vote with their feet and retain the strong while eliminating the weak.

Leveraging the advantages of the market mechanism, suppressing its disadvantages and preventing market failure is one of the theo­retical cornerstones of regulation by government authorities, with the regulators becoming the guardian angels of the capital markets.

9. What is your outlook for the market over the next 12 months What are some of the major trends you see emerging

During the next 12 months, the revision of the Securities Law has been placed on the agenda and has entered the busy preparatory work stage. After that, the revision of the Measures for the Administration of Initial Public Offerings of Shares and the Listing Thereof and the corresponding information disclosure provisions will also be on the agenda. In the future it is entirely possible that we will enter an intense period of capital market legislation, and the registration system for securities offerings will be established with the revision of the Securities Law and will be continuously improved after that.

1. 过去12个月，中国资本市场方面出台了什么主要法规？这些新法规如何明确了现行法规的问题？

除2013年底《公司法》的修改外，过去一年对中国资本市场更加具有直接影响的或许是自2013年底动并至今不断深化和丰富的新股发行体制改革，今年5月份《首次公开发行股票并在创业板上市管理暂行办法》的修订及《创业板上市公司证券发行管理暂行办法》的出台也是其具体表现之一。

新股发行体制改革突出了发行审核制度以信息披露为中心，进一步完善新股发行定价机制，强化了执法力度。它缩小了不同发行审核制度的转换距离，是从核准制向注册制迈进的必经之路，新股发行体制改革同时也为下一步《证券法》的修改提供实践支持。

2. 今年所出台的《关于加强新股发行监管的措施》在提高IPO过程的透明度方面是否成功？

《关于加强新股发行监管的措施》（《措施》）强调以招股书作为唯一的信息披露标准，加强对高于行业平均市盈率定价的风险提示，同时对参与询价的投资者资格提高了要求。

《措施》对于发行定价过程的公平、公开、公正进一步提供了措施保障，有利于提高新股发行定价的透明度，提高发行效率，确保发行的成功。

3. 中国的大型互联网公司希望从证券交易所那里得到什么？

境内大型互联网企业选择交易所时考虑的因素主要可以归结为：

• 庞大的证券市场和雄厚的资金来源。交易所所在的证券市场的稳定性以及其代表的雄厚的资金来源是境内大型互联网公司在特定的交易所上市融资的首要目的，因为稳定的证券市场和雄厚的资金来源可为企业融资提供最大的空间。
• 便利再融资的法律、政策环境。交易所所在的国家、地区的法律、政策环境是否鼓励或者便利上市公司的再融资，也是中国互联网公司选择交易所上市时必须考虑的因素。
• 强化公司并购的手段。国内许多互联网公司均有上市后持续的战略投资、收购安排，因此，在特定交易所上市的股票是否被认可、交易所所处国家、地区的法律和政策环境是否鼓励并购的实施等均为国内互联网公司在选择上市的交易所时着重考量的因素。
• 管理层个人利益最大化。是否能实现管理层利益最大化往往也成为国内互联网公司选择交易所的重要考虑因素。

除此之外还有其他的考虑因素，例如：交易所当地的证券监管法律是否有利于促进中国公司的内部改革和提高公司治理的水平；在特定的交易所上市是否有助于提高公司的全球知名度和良好声誉等。

4. 在您所处理的IPO委托中，有什么经验和策略可以和我们分享？

首先，发行人应该选择一个适合自己企业和行业发展的证券市场去融资上市，结合其自身的发展程度和理念，以及市场的特性（如境内市场与境外市场各有特点及优劣），需要根据企业自身情况做出选择和判断。

其次，中介机构的水平对发行人成功发行上市有非常重要的作用，因此在选择中介机构时发行人应慎重，不应简单考虑价格因素，主要机构过往业绩、主办人员的经历经验等都应作为重要的考量因素。

此外，发行人应严格遵守上市地的法律以及交易所关于上市的要求，披露一切需要披露的信息，将具体问题交由专业中介机构来判断，避免信息披露不符合真实、准确、完整的要求而带来一系列潜在风险。

5. 在IPO的过程中，您一般都遇到什么挑战？

由于中国证监会IPO审核进程的时断时续，造成大量在审企业积压在审核流程中，无法满足发行人融资的需求，给发行人的正常经营运作造成了资金压力，发行人的生产经营计划无法与资金到位的预期相结合，对其正常经营产生了相当的影响。

中国证监会对于IPO的审核标准并不是完全公开透明，具有一定的随意性及主观性，发行人与各中介机构长期疲于应付各类问题的答复，往往削足适履，事得其反。

在目前的审核体制下，个别发行人可能会隐瞒一些重要事实以达到顺利通过发行审核的目的，给包括律师事务所在内的中介机构带来很大的执业风险。

6. 发行人在在岸和离岸上市中主要关心关注什么问题

第一个问题是监管环境和政策。无论境内还是境外上市，上市地的监管是否严苛、上市环境是否宽松是发行人的首要考虑因素。

另外，市场认可程度也是一个问题。发行人上市虽属资本运作，但其中的宣传效应亦不容小觑。境内市场自毋须多言，境外市场中对境内企业的认可和了解程度则大相径庭。因此市场对本行业、本企业的认可程度也成为发行人境内外上市的关心问题。

7. 沪港通对两地市场有什么好处？

沪港通是我国资本市场对外开放的重要内容，有利于加强两地资本市场联系，推动资本市场双向开放，对两地资本市场的发展均具有多方面的积极意义：

首先，沪港通令投资主体多元化，并完善价格发现机制。沪港通开通后，国内资本市场的博弈环境将发生根本改变。投资者不仅与国内各类投资主体博弈，还会与国际市场的各类投资主体博弈；不仅与虚拟经济环境博弈，更会与实体经济环境博弈。这是一个各类投资主体投资多元化、盈利模式多元化、套利机制多元化的过程。这将导致投资者集中扎堆某一投资主题的现象逐渐消失，真正恢复证券市场应有的资源配置和价格发现功能，培育和形成“公开、公平和公正” 及诚信的证券市场环境。

此外，这是市场监管合作的契机，可促进上市公司发展。沪港通开通后，国内上市公司会以沪港通的投资标的为标杆，加强上市公司的公司形象培育，增强市值管理，规范公司的估值体系，推动公司转型升级。不但满足了国内经济的发展需求，而且将形成长期投资和价值投资的经营氛围，推动国内上市公司经营创新步伐，投资者回报也将上一个新台阶，从一定程度上打开国内上市公司与国际接轨的空间。

这也是走向国际化的一步，并扩大两地资本市场的影响力。一方面，沪港通有利于巩固上海和香港两个金融中心的地位。另一方面，对于国内的上市公司而言，沪港通使得面向国际市场的并购重组成为可能。沪港通开通后，国内上市公司并购重组的触角将可伸向国际市场。具有较强资本实力及发展前景的上市公司，将可以自身独特的市值管理手段和主业竞争优势，通过做大做强资本版图，掌握国际市场的定价权，帮助A股树立起全球化资本市场的形象。

8. 中国监管机构要怎样做才能令其股票市场振作起来并恢复投资者的信心？

一个市场的流动性是体现市场活跃程度的指标，也是市场发挥资源配置作用的基础。而市场的流动性可以从参与交易的主体数量、参与主体进出该市场的速度，以及信息在该市场的交换速度体现出来，资本市场也不例外。基于前述理解，我们认为可以相应从两方面增强资本市场活跃程度，提振投资者信心：一是稳步推进《证券法》的修改，落实证券发行的“注册制”，强化信息披露，鼓励新进上市公司，让投资者在信息对称的基础上发挥价值判断的优势；二是进一步落实保护中小投资者基础上的退市制度，并鼓励资本市场中的重组并购行为，让投资者“用脚投票”，留强汰弱。

发挥市场机制的优点，抑制市场机制的缺点，防止“市场失灵”是政府部门实施监管的理论基石之一，监管部门要成为资本市场的守护神。

9. 未来12个月, 您对于市场有什么看法？您有没有看到有什么主要的趋势正在酝酿？

未来十二个月，《证券法》的修改已提上日程并进入紧锣密鼓地准备工作。随即，于2006年颁布的《首次公开发行股票并上市管理办法》及相应信息披露规定的修改亦会渐行渐近。未来很可能会进入一个资本市场立法的密集期，证券发行的注册制会随着《证券法》的修改而建立并不断完善。