China is planning tougher stock market regulations that will make it easier to delist companies and cool speculation in initial public offerings.
Both the Shanghai and Shenzhen stock exchanges said that they planned to widen the criteria for delisting companies to protect investors from companies that are not open about their financial position.
It comes as the China Securities Regulatory Commission (CSRC) published new guidelines for initial public offerings, which aim to force the prices of share issues to 'more reasonable' levels.
Guo Shuqing , the new CSRC chairman, has pledged to fight insider trading and make the market less speculative, and fund managers and analysts say more policy changes should be expected.
'The two new changes both mean good things to the stock market in the long run,' said Hu Yifan, chief economist for Haitong Securities International. 'The new delisting rule can help to clean up the mess in the market and the new IPO rule will make it a fairer place for both institutional and individual investors.'
Companies on the mainland can suspend trading of their shares for years, sometimes without giving a clear reason. In some cases, stocks of loss-making companies have been halted for up to five years to avoid delisting, drawing heavy criticism from investors.
