Regulators double daily trading band on Shenzhen’s US$1.3 trillion ChiNext board in latest move to support China’s tech companies
- Shares listed on Shenzhen’s ChiNext board will be allowed to rise or fall by 20 per cent every day starting from Monday, double the previous limit
- The relaxation is seen as a move by the regulator to further improve market efficiency and shore up hi-tech firms amid souring China-US relations
The technology board of the Shenzhen Stock Exchange will double its daily trading band from Monday in the latest move by Chinese regulators to support the nation’s hi-tech firms amid widening disputes between Beijing and Washington.
The companies on the ChiNext board will be able to rise or fall by up to 20 per cent on a daily basis, having until now been limited by a 10 per cent cap. No restrictions will be imposed on how much new shares can move in the first five days of trading.
Previously, new listings could rise by up to 44 per cent and drop by a maximum of 36 per cent, before the 10 per cent limit kicked in after their debut.
The loosening of equities trading barriers is the latest move by policymakers to reform China’s three-decade old capital market. A new technology board in Shanghai, with the same trading band as ChiNext’s new regime, has proved successful in its first a year of operation.
A market-based registration system for vetting initial public offerings, in which regulators will focus more on corporate disclosures and leave the judgement of companies’ growth outlook to investors, has also been applied to the ChiNext board.
The ChiNext, launched in 2009, has a market cap of 8.9 trillion yuan (US$1.3 trillion) and more than 800 listed companies while its rival, Shanghai’s Star Market, is capitalised at 2.9 trillion yuan with 159 companies.
About a quarter of the ChiNext companies are accessible to overseas traders through the Stock Connect, a cross-border investment channel between the exchanges of the mainland and Hong Kong. Still, its biggest constituents, lithium battery maker Contemporary Amperex Technology and Shenzhen Mindray Bio-Medical Electronics, have not yet made it to the onto that list.