Caixin
Nov 14, 2018 08:29 PM
FINANCE

Big Bets Return for Bad Stocks

Speculation on takeovers of listed shell companies has sent their shares surging as regulator relaxes stance on mergers and acquisitions. Photo: VCG
Speculation on takeovers of listed shell companies has sent their shares surging as regulator relaxes stance on mergers and acquisitions. Photo: VCG

The government’s campaign to stop the stock market slump, support the private sector and boost investor confidence has led authorities to relax many regulations originally aimed at reining in risk or curbing undesirable activity.

The securities watchdog’s recent announcement that it will encourage mergers and acquisitions (link in Chinese) to help cash-strapped listed companies has triggered a renewed hunt for so-called shell companies amid speculation that the official stance on backdoor listings is being softened. The notice is one of several released by the China Securities Regulatory Commission (CSRC) in October to support acquisitions, including a pledge to fast-track small deals and allowing acquisitions if they provide additional financing to pay off a company’s debts.

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