In big step, China to loosen curbs in its stock exchanges, expanding reforms from its young Star tech board
- Stocks would be allowed to gain or lose without curbs in first week of trading
- After that, stocks could rise or fall 20 per cent in a day
Beijing will expand major reforms in its young Nasdaq-style tech board to its main exchanges, removing caps on the first day of trading of new stocks, allowing stocks to make bigger daily moves and speeding up the process for new companies to go public.
In comments Sunday to state-run media outlet Xinhua, Yi Huiman, chairman of the China Securities Regulatory Commission (CSRC), said the liberalisation steps on the three-month old Star Market technology innovation board proved successful. That led the regulator to believe it could loosen restrictions in the broader mainland markets. It was unclear from the Xinhua report when the changes will take place.
“Based on the running of the (Star) Market since it was launched, the reform measures have turned out to be successful so far,” he said. “We believe that the Star Market will eventually generate great technology companies after a certain period of time.”
China has experimented with volatility curbs since its markets melted down in 2015, wiping out US$5 trillion in market value.
Currently, stocks on their first trading day on the main stock exchanges in Shanghai and Shenzhen are restricted to a 44 per cent gain. After that, like other stocks, they are allowed to rise or fall by no more than 10 per cent.