Chinese shares open sharply higher Monday

April 21st, 2008 - 12:46 pm ICT by admin  

Xinhua

Beijing, April 21 (Xinhua) Boosted by the regulator’s measures to stabilise the market announced late Sunday, China’s major stock index opened more than six percent higher Monday. The Shanghai Composite Index rose 6.80 percent and the Shenzhen Component Index was up 7.46 percent.

China’s securities regulator, the China Securities Regulatory Commission (CSRC), late Sunday ordered shareholders to sell stocks on the block trading system if they expect to sell a large amount of shares that were freed from the lock-up period.

When more than one percent of a listed firm’s total shares are sold within a month, the holders should use the block trading system, the CSRC said.

Analysts say the measure is a move to shore up the stock market, after the benchmark Shanghai Composite Index plunged by 49.5 percent from its all time high in last October.

Investor sentiment was weak on the lingering concerns that the huge amount of such shares would flood the market for cash and therefore sink share prices.

“If such shares are all to be traded on the bid trading system, the trading will be low-efficient as the volume is often restricted by the buying interest on the secondary market,” a CSRC spokesman said in a statement.

“The trading will also exert huge pressure on the share prices and twist the pricing mechanism,” the spokesman stated.

The country’s stock market is faced with more complicated internal and external factors, the spokesman noted, adding the external factors include the recent huge volatility on the global financial market, its bigger impact on the emerging markets and the sustained price rises of energy, resources and grain.

The external factors have also affected the judgement and sentiment of domestic investors, the spokesman stated.
Xinhua

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