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Christine Chan

BEIJING'S securities watchdog yesterday backed the Shenzhen Stock Exchange's radical decision on Tuesday to suspend new listings of A shares.

  The China Securities Regulatory Commission (CSRC) said the decision was within the power and functions of the exchange.

   Although the ban saw a boost in trading, it raised concerns about the exchange's power to make such a decision.

  The Shenzhen exchange had not sought approval from Beijing or from the securities regulator in Shenzhen.

  The bold move, the first of its kind by a mainland exchange, raised critical questions about its effectiveness and the adverse impact it might have on the market.

  However, the CSRC, the executive arm of the State Council's Securities Policies Committee, said yesterday that an exchange could, within its functions and powers, arrange the listing schedule without the commission's approval.

  ''The announcement was in line with the principle laid down this year by the State Council's Securities Policies Committee for share issues: shares should be timely launched according to the market situation,'' the CSRC said.

  Although the CSRC backed the Shenzhen exchange's move, an official of the Shenzhen Securities and Exchange Commission (SSEC) - the local regulator - said it should have been informed.

 The official said yesterday in Shenzhen that any major decisions of the exchange should be reported to the Shenzhen municipal Government as the exchange fell within the Government's hierarchy.

  The SSEC was empowered by the Shenzhen municipal Government to regulate the exchange.

  ''We haven't had any written notice from the exchange on the halt to new listings since the ban was imposed,'' he said.

  The official said the move came as a surprise, even inside the exchange.

  ''One day before the announcement, the exchange's listing department had approved five companies for listing,'' he said.

  Meanwhile, Shanghai is experiencing a busy schedule of new listings, with 1.3 billion A shares issued so far this year, and it had no intention of blocking the path to the market.

  Shanghai Stock Exchange president Wei Wenyuan confirmed that there were no plans to limit the number of companies coming to the market.

  Both exchanges were clouded by bearish sentiment and sluggish trading.

  They were also plagued by the Government's over-ambitious plan for enlarging its stock markets, with 5.5 billion A shares to be issued this year.

      Mr Wei said there should not be too much worry about the current market situation, which he said should be considered normal in the development process of a new market.

  ''The Shenzhen ban was made according to its market situation and was a technical measure,'' he said.

  Mr Wei said the Shanghai exchange, however, would maintain conditions so that it would grow steadily.



Watchdog backs ban on listings