IPO Exit Rules Eased in China

Filed in archive IPOs on September 7, 2008

In response to complaints by foreign investors, China's two national stock exchanges have decided to make it easier for investors to cash out of investments in China, according to Bloomberg.

"China shortened the trading moratorium for investors who buy stakes in initial public offers," the news agency reported. Until this move on Friday, investors who used IPO shares in a company as a way of getting their private equity or venture capital funding back had to wait three years before selling the IPO shares. That period has been shortened to just one year now on the Shanghai Stock Exchange and the smaller Shenzhen Stock Exchange.

The new rules will be effective from October 1st.

"Shortening the lock-up could make it more attractive for pre-IPO strategic investors," said Fraser Howie, a Singapore- based analyst at CLSA Ltd. "More disclosure is good for the market."