March 8 -- The Shenzhen Stock Exchange (SZSE) yesterday rolled out new requirements aimed at reforming the issuance of new shares, and curbing irrational price gains on the first day of trade, reports yicai.com, citing the SZSE.
According to the new rules, stocks of new listings will have to be suspended from trading until 14:57pm on their debut if stock price changes hit the 10 percent limit, or if the turnover rate hits 50 percent.
At present, stocks of new listings will be suspended if they rise or fall by the 20 percent, 50 percent, and 80 percent limits.
This new rule applies not only to new listings on the ChiNext and Small and Medium-Sized Enterprises Boards, but also to companies resuming share trading after a trading suspension, and to companies with no share price movement restrictions in place.
In addition, the exchange is mulling canceling the practice of allowing investors to withdraw their artificial orders placed at high prices during the time between 9:15am and 9:20am.
According to Song Hongyan, a consultant at CITIC Securities, the new rules on the turnover rate of 50 percent could allow stocks to better reflect their intrinsic value, as the number of shares available for investors to sell on the first day of trade will be dramatically reduced.
Since mid February, eight new listings rose by an average of 62.65 percent on their first day of trade, and three companies recorded gains of more than 80 percent.