Fundraising has again become a topic of concern on the mainland stock market in recent days. Last week, China Merchants Bank announced that it had received the official nod from the China Securities Regulatory Commission (CSRC) to raise about 28.5 billion yuan ($4.65 billion); at the same time, BOE Technology Group Co also published its private placement plan to raise up to 46 billion yuan.

Worrying that such fundraising will dry up liquidity in the already stalling A-share market, many suggest the securities regulator should also suspend the refinancing plans of listed companies, in the same way as it has halted IPO approvals. It is understandable that market players panic about fundraising, considering that quite a number of mainland-listed companies failed to properly use the funds they raised from the stock market and didn't show much improvement in their business performance as a result.

Yet it is totally wrong to call for a suspension of fundraising because the basic function of a stock market is to finance companies that have potential. If companies couldn't receive the capital supplement they need from the stock market, then its existence is pointless.

The author is An Ning, a media personality.

Securities Daily