China’s securities regulator has proposed a major overhaul of the refinancing system, with draft rules that target a type of private placement arbitrage that has allowed select investors to buy shares at steep discounts while minority shareholders bear the dilution.

The move comes amid a sharp rebound in fundraising. After collapsing to 223 billion yuan ($31.3 billion) in 2024, the Chinese mainland stock market’s refinancing more than quadrupled to 951 billion yuan last year. Citic Securities Co. Ltd. expects the figure to exceed 1 trillion yuan this year.

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