Brokers urge action on flood of Shanghai and Shenzhen share-trading suspensions
Hong Kong brokers have urged mainland regulators and stock exchanges to stop hundreds of mainland firms suspending their shares from trading in order to avoid precipitous price falls.
As of Monday, 981 A-share companies – 125 in Shanghai and 856 in Shenzhen – remained voluntarily suspended voluntarily. That’s 35 per cent of all A-share stocks but an improvement from Wednesday’s peak of 1,429, when half of all A-shares were suspended, with 660 companies applying for suspension that day alone.
Former financial services functional constituency lawmaker Chim Pui-chung said companies should not be allowed to “make up excuses” to justify suspension of trading, because that left investors unable to exit their investments.
“The listed companies which opt for suspending their shares to avoid the market falling are like boats going into a safe harbour,” Chim said. “This, however, is not fair to the investors. The regulators should ban companies from using such excuses to suspend trading and should investigate if they have projects going on. If not, the regulators should force them to resume trading.”
The issue here is credibility. The regulator has to provide a level playing field
Most suspended companies have cited developments related to “important projects” as the reason for suspension. However, brokers generally believe that was just an excuse to prevent their shares from selling low when the market fell early last week.