Shanghai exchange moves to curb speculation even before trading starts at Nasdaq-style tech board, introduces suspension rules
- Shares on Star Market to trade freely for first five days, after which they will be subject to upside and downside limit
- Exchange will suspend trading for 10 minutes if a stock jumps or falls by 30 per cent and 60 per cent during intraday trading
The Shanghai Stock Exchange introduced rules to limit speculation on the Star Market, its new technology innovation board, on Friday.
According to the new rules, shares on the Star Market will be allowed to trade freely for the first five days, after which they will be subject to a 20 per cent upside or downside limit. The exchange will also suspend trading for 10 minutes if a company’s stock jumps or falls by 30 per cent from its opening price during intraday trading. Another 10-minute suspension will be imposed if the rise or fall hits 60 per cent during intraday trading.
Currently, stocks in mainland Chinese markets have a 10 per cent daily limit, but there is no trading cap for the first day of trading.
“It is expected that technology companies will attract a buying frenzy,” said Ivan Li, asset manager with hedge fund Loyal Wealth Management. “The regulators have planned ahead and will step in to cool the market, because a smooth trading start is needed to ensure a successful launch for the new board.”
The Star Market, ordered into existence by Chinese President Xi Jinping in November to spur growth at mainland Chinese technology companies, is expected to boost these firms at a time when China’s companies face the prospect of their supply chains being strangled by US suppliers amid an escalating trade war between Beijing and Washington.