An Obscure Rule Snaps One of the World’s Hottest Rallies
Beijing is trying to help firms raise cash as the coronavirus outbreak worsens. But changing refinancing regulations could spark a selloff.
Grrrrr.
Photographer: Peter Juelich/BloombergWhat do you do if your stock has doubled in just a few months and your company is bleeding cash? Sell shares, of course.
A recent change to China’s refinancing rules promises to unleash billions of new shares into the market, leaving mom-and-pop investors wrong-footed and snapping one of the world’s hottest rallies. As the coronavirus outbreak worsens, bureaucratic entities from the central bank to the finance ministry have been trying to make it easier for companies to raise money. The securities regulator made no exception: On Feb. 14, it substantially relaxed equity-refinancing guidelines for listed companies.