China has decided to resume Initial Public Offerings, or IPOs, as early as June. In a short trading week before the holiday, the stock market shrugged off a slight fall on the back of the news. Analysts say the listing reform will lead to a healthier market.

Chinese stocks ended 1.7 percent up on Wednesday. Shares rounded off May with their third largest monthly gain so far this year. For this month, Chinese stocks were up 6.3 percent. The market has recorded a 40 percent gain so far this year. Though the IPO news dampened the market to a 3-week low this week, but it only had a limited impact.

Huang Yongdong, Securities Analyst said "Concerns that the new offerings will divert funds from the secondary market are legitimate."

Some have doubts about the timing of the IPO resumption and fear the return of IPOs will end the rally this year. But analysts say the decision makes sense.

Huang Yongdong said "It is a signal."

Analysts added most of investors chasing new shares are speculators, hoping to benefit from the huge price gap between primary and secondary markets. Reform against public listings will help the market run more rationally. It will also encourage retail investors' participation and help reduce stocks' premiums to the IPO prices on the first trading day.

(CCTV May 31, 2009)