Curbs on speculative trading in new shares
By Feng Jianmin |
March 9, 2012, Friday
|
Print Edition
Print Edition
THE Shanghai Stock Exchange yesterday tightened trading curbs on stocks making their debut as it tries to rein in speculative manipulation of newly-listed shares following similar measures taken by the Shenzhen Stock Exchange.
The measures were introduced after the China Securities Regulatory Commission urged greater efforts to tame speculation in the trading of new shares, which is believed to distort the share price and damage interests of smaller investors.
Under the new rules, trading of newly listed companies will be halted until five minutes before the market close if their prices rise or fall by 20 percent from their opening prices, or if their turnover rates exceed 80 percent, the Shanghai bourse said in a statement yesterday after the market closed.
Companies that fluctuate more than 10 percent on each side of the opening price will be suspended from trading for 30 minutes, the statement said.
Investors can still place or cancel their orders during the suspension, and deals will be done depending on call auction prices when trading resumes.
Previously, Shanghai did not restrict the turnover rate, and new shares were suspended only after hitting the 30 percent limit. Wang Jianhui, a chief researcher at Southwest Securities, said: "The new rules may have short-term effect and will help reform the issuance mechanism of new shares."
Guotai Junan Securities said in a report that the new rules will curb prices on the first day of trading but investors may still speculate and cause the prices to fluctuate even more in later trading sessions.
Shanghai's rules were milder than those drawn up by the smaller Shenzhen bourse on Wednesday. The latter ruled that firms will be suspended till three minutes before market closure when their turnover rate exceeds 50 percent or when their shares rise or fall more than 10 percent of the opening prices.
The measures were introduced after the China Securities Regulatory Commission urged greater efforts to tame speculation in the trading of new shares, which is believed to distort the share price and damage interests of smaller investors.
Under the new rules, trading of newly listed companies will be halted until five minutes before the market close if their prices rise or fall by 20 percent from their opening prices, or if their turnover rates exceed 80 percent, the Shanghai bourse said in a statement yesterday after the market closed.
Companies that fluctuate more than 10 percent on each side of the opening price will be suspended from trading for 30 minutes, the statement said.
Investors can still place or cancel their orders during the suspension, and deals will be done depending on call auction prices when trading resumes.
Previously, Shanghai did not restrict the turnover rate, and new shares were suspended only after hitting the 30 percent limit. Wang Jianhui, a chief researcher at Southwest Securities, said: "The new rules may have short-term effect and will help reform the issuance mechanism of new shares."
Guotai Junan Securities said in a report that the new rules will curb prices on the first day of trading but investors may still speculate and cause the prices to fluctuate even more in later trading sessions.
Shanghai's rules were milder than those drawn up by the smaller Shenzhen bourse on Wednesday. The latter ruled that firms will be suspended till three minutes before market closure when their turnover rate exceeds 50 percent or when their shares rise or fall more than 10 percent of the opening prices.
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