SSE Builds Financial Defense Line to Combat Coronavirus Outbreak

Since the outbreak of the novel coronavirus pneumonia, the Shanghai Stock Exchange (SSE) has resolutely implemented the decisions andplans made by the Party Central Committee and the State Council, put into practice the “Notice on Further Strengthening the Financial Support for Prevention and Control of the Outbreak of the Novel Coronavirus Pneumonia” issued by five ministries and commissions and follow the requirements of the China Securities Regulatory Commission (CSRC) for prevention and control of the epidemic, and released the “Notice on the Regulatory Arrangements for Fully Supporting the Prevention and Control of the Outbreak of the Novel Coronavirus Pneumonia”. By releasing the notice, the SSE has made adjustments and linkage arrangements for relevant business in the special period of epidemic prevention and control, improved the self-regulatory and service methods, set up dedicated service channels and provided convenience for online business operation, reduced the operating costs of companies in key regions, ensured the stable and orderly functioning of all business, and made every effort to prevent and control the epidemic.

Improving the self-regulatory measures to ensure the orderly operation of the market

In response to the new challenges faced by the listed companies in terms of information disclosure, corporate financing, mergers and acquisitions and reorganizations, the SSEhas made the self-discipline regulation flexible and people-oriented by fully implementing the notice issued by five ministries and commissions and following the requirements of the CSRC, making specific regulatory arrangements for the special period, respecting the law of the market, and presenting the regulatory flexibility.

Optimizing the review work for the SSE STAR Market.The time limits for the review have been relaxed. Since February 3, time counting related to the STAR Market has been terminated, including the time limits for the IPO review, the review for the major asset restructuring of listed companies, and the response made by the issuers in other related reviews, as well as the time limit for the issuers to update the financial statements. The SSE has accepted applications and conducted review in the normal manner, and supported the high-tech and innovative enterprises involved in the prevention and control of the epidemic to go public on the SSE STAR Market, which means the application of those companies with complete materials will be accepted immediately upon application, and special reviewers familiar with the biopharmaceutical industry will make intensive efforts and conduct the review proactively.Online business consultation has been offered through the review system with the processsimplified, and time for responsewill not exceed 2 working days.

Optimizing theoffering and underwriting services. The schedulesfor current and incoming offerings have been adjusted, and the off-site road shows through the Internet and telephone are encouraged. The SSE has updated its services by holding listing ceremonies throughlive or recorded broadcast. In order to bolsterthe listed companies in Hubei Province, the annual listing fee in 2020will be waived for those companies, and the Hubei-based companies listed in 2020 will also be exempted from the initial listing fee and the annual listing fee. At present, a total of 9 companies have completed the process of subscription for new shares, with 7 of them on the SSE STAR Market and 2 on the main board.

Optimizing the information disclosureregulation and services. The SSE has analyzed relevant business of listed companies including convening of shareholders' meetings, listing of shares with limited sales, interest payment and redemption of bonds, andmade linkage arrangements for more than 130 companies. As some listed companies found it hard to conductthe auditing due to the epidemic, resulting in the companies’ inability to disclose the 2019 annual report and the report for the first quarter of 2020 on schedule, the SSE has made deferral arrangements for those companies. At present, the SSE has properly arranged for more than 70 companies to change the appointed datesfor annual report disclosure. At the same time, the time limits for merger and acquisition and restructuring have been appropriately relaxed: one company (Chongqing Sokon Industry Group Co., Ltd.) has been given extended time in accordance with the rules to provide valid financial data for reorganization.

Providing emergency assistance for theepidemic-striken regions, and enhancing the direct financing services

In view of the severe impact on some industries, the production of the enterprises and the investment in the areas with the serious epidemic situation such as Hubei Province, the SSEhas adhered to the principle of making everything conducive to preventing and controlling the epidemic and promoting the smooth operation of the capital market, prioritizingthe areas and enterprises seriously affected by the epidemic in offering efficient and convenient direct financing services.

Establishingthe green channel for bonds in epidemic-striken regions. For the enterprises in Hubei Province and other areas in severe epidemic situation, and the companies raising fundsfor the purpose of epidemic prevention and control, the SSE has set up a green channel for reviewing the issuance of corporate bonds and asset-backed securities. At present, the SSE has optimized the review process for a number of corporate bonds issued by the Hubei-based companies such as Wuhan DDMC Culture Co., Ltd. and Xiangyang CityDongjin Destrict’s Development & Investment Group Co., Ltd., taking the measures of “specific personnel for contact, dedicated review, review upon application, and handling special cases with special methods”. At the same time, the SSE has fully worked with and supported relevant companies in issuing the “epidemic prevention and control bonds”, and vigorously improved the service for the issuance of the local government bonds during the period of epidemic prevention and control.

Speeding up the review for funds in theepidemic-striken regions. In order to support the construction of the public utilities such as transportation, communications, education, hospitals and sewage treatment systems in Hubei Province, on February 10, the SSE assisted China Merchants Fund in submitting the application for the issuance of the China Merchants Hubei Province Local Government Bond ETF, the market’s first “bond fund for epidemic prevention and control” targeted at the assistance for Hubei Province. The SSE accelerated the review through the “green channel” with the letter of no objection issued within 2 working days.

Examining potential risks, and firmly guarding the market gateforepidemic prevention and control

Increasing the inspection of the risks in the listed companies, the bond market, the trading operation and other areas, the SSE has thoroughly studied and carefully assessed the extent of the epidemic impact on the market participants, and made corresponding arrangements in a timely manner, so as to ensure safe and sound market operation.

Increasing the examination of the risks of the listed companies. The SSE promptly send staff to find out the listed companies’ resumption of operation and production, identifythe impact of the epidemic and learn about the reasons for failing to resume operation and production and the challenges faced by the companies. In light of the situation, the SSE conducted in-depth analysis and put forward targeted solutions to the major difficulties of the listed companies concerning resuming operationlogistics and capital flows. At the same time, the SSE paid close attention to the impact of the fluctuations in the secondary market on the listed companies, focused on the risk of the companies on the verge of delisting, closely followed up on the typical problems such as the speculation in the stocks involving epidemic prevention and control, and examined the risks that are likely to affect the overall operation of the market such as the pledge of stocks.

Stepping up the screening of the risks of the bond market. The SSE continue to work on the issuers’ information disclosure, and guided the epidemic-stricken issuers in faithfully fulfilling their information disclosure obligations by setting up the special service channel for information disclosure. The SSE has intensified the examination of the risks of the bond issuers in the key industries based in the worst-hit areas, and vigorously urged the entrusted managers to support the issuers that are likely to face the redemption risk, so as to mitigate the liquidity risks by persuading investors out of selling back, reaching renewal agreements, reselling the bonds and other means.

Ensuring smooth and safe market trading. In order to guarantee the smooth opening of the market after the Spring Festival holiday and during the period of epidemic prevention and control, the SSE has made every effort in technical maintenance and support. Before the Spring Festival holiday, the Waigaoqiao Disaster Recovery Center was activated, and corresponding changes were made to 28 systems such asthe trading system, the business system and the mid-end service system , so as to ensure the smooth trading on the first day after the delayed opening of the market. After the opening of the market, based on the situation of market trading, the SSE has rapidly initiated the checks on the capacity of 12 trading systems, including the core trading system and its ends of the floor trading affairs, and intensified the tracking of the production and operation and the risk identification.

The difficulties will be eventually conquered, and the victory is dawning. At present, the epidemic prevention and control has reached the most strenuous phase. In addition to the previous donation of RMB30 million to the Hubei Charity Federation which will be specially used for combating against, preventing and treating the novel coronavirus in Wuhan City and surrounding areas, the SSE Labor Union has recently organized the employees to participate in another round of special donation. In the face of the nationwide “great war against epidemic”, the SSE will, under the leadership of the CSRC, continue to strengthen leadership, diligence and fulfillment of responsibilities, make relentless efforts in the key tasks for epidemic prevention and control, ensure the stable and sound operation of the SSE market with all resources of the exchange at the forefront of the capital market, further deepen and fully support the reform of the SSE STAR Market,determine to win the people's battle, general battle and blocking battleof epidemic prevention and control, and make more contributions to achieving this year’s targets and tasks for the national economic and social development.