IPOs need bold reforms

The China Securities Regulatory Commission is right to restart fund raising in the domestic stock market even if investors do not welcome it so much at the moment.

The benchmark Shanghai Composite Index has rebounded by about 1,000 points since last October to cross 2,600 last week. This must have convinced many investors of the benefits of the de facto suspension of initial public offerings (IPOs) on the Shanghai and Shenzhen stock exchanges since last September. But such suspension neither helps economic growth nor facilitates healthy development of the stock market.

Given rising investor fears that IPOs might foil the current rally, it is a brave decision on the part of policymakers to decide to resume share sales that can allocate resources efficiently and help companies cope with the economic crisis.