Shanghai to widen daily price band
By Li Xiaowei (China Daily)
Updated: 2006-06-14 11:44
The Shanghai Stock Exchange is looking into widening the daily price band for
blue chip companies, according to China Securities News, the exchange's official
publication.
The newspaper said the exchange was also hoping to allow
investors to buy and sell shares on the same day in a bid to boost trading and
liquidity.
In addition, the exchange is drafting new rules on the
introduction of margin trading, the buying and selling of stocks with borrowed
funds provided by stock brokers.
While analysts expect margin trading to
be introduced in the second half of this year, there is not yet any indication
of a timetable for the other two market proposals.
However, analysts said
the introduction of measures to increase market liquidity is just a matter of
time given the near-completion of share reforms.
These involved
converting non-tradable State-held shares into regularly traded equity and the
lifting of a year-long ban on initial public offerings.
The exchange has
proposed widening the daily price band the daily price limits within which the
price of a security is allowed to rise or fall for the SSE 50 Index from
the current 10 per cent to 20 per cent.
The change would be applied to
the bourse's top 50 firms, whose management is more transparent and whose stock
prices are more stable.
"Widening the price band to 20 per cent would
reduce the number of times the price limit is reached by over 90 per cent," Liu
Ti, of the exchange, was quoted as saying in China Securities News.
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