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Winds of delisting begin to blow

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China has taken another small step towards its first delisting of a company by saying that it would soon announce rules for stripping deadbeat companies from the stock market.

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'The bell tolls for delisting,' read a headline in the China Securities newspaper. The same publication and other financial dailies published a brief report stating that delisting procedures would be announced soon.

The sabre-rattling scared investors enough to sell down most of the stocks in the Special Trading category - those shares subject to trading curbs because of deep financial difficulties.

'This is a signal to investors that there is risk in the market,' said Peng Xiaoquan, an analyst at Guotong Securities in Shenzhen.

'There is lots of irrational investment in the market.'

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Fourteen of the so-called Special Trading companies in Shanghai and 19 in Shenzhen fell their 5 per cent limit yesterday.

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