China Traders Ready for Stock Limits to Double Next Week
China Traders Ready for Stock Daily Limits to Double Next Week
(Bloomberg) -- Stocks on China’s Nasdaq-like ChiNext board will be allowed to rise or fall 20% as of next week when the first batch of listings under revamped rules start trading.
The Shenzhen Stock Exchange said Friday that the first batch of listings will start trading on Aug. 24, which means the 20% limit will be put into effect the same day, according to rules announced in June. The changes -- which won’t yet apply to main boards in Shanghai and Shenzhen -- will bring more volatility to an index that often sees daily moves of 5% or more. In doing so the $1.3 trillion ChiNext board will serve as a testing ground for whether Beijing can loosen its tight grip on trading.
While the bourse didn’t give the names of the firms in the first batch, at least four companies including Beijing FengShangShiJi Culture Media Co. and Yangling Metron New Material Inc. have announced in stock exchange filings that they’ll start trading on the board next Monday. Stocks listed under the new measures will not be subject to a daily price limit in the first five trading sessions.
Having jumped 50% this year, the ChiNext Index has outperformed major global peers, powered by expectations that China will step up state support for homegrown technology. Gains have recently been tempered by concerns of further U.S. action toward Chinese technology and communications firms.
Mainland investors encouraged by the move to extend the trading limits piled into brokerages, sending a Bloomberg gauge for the sector up 5% to one-month high. China Merchants Securities Co. soared by the 10% daily limit, Guosen Securities Co. gained 9.3% while Guotai Junan Securities Co. jumped 4.7%.
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With assistance from Bloomberg