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SHANGHAI: China has set an 80-per-cent limit on share price movements for the opening day of ChiNext, its planned Nasdaq-style board, to curb speculative trading, the Shenzhen bourse said Thursday.
If the prices of start-up stocks move up or down 80 per cent during the first trading day, the bourse will suspend trading until the final three minutes before the session ends, the Shenzhen Stock Exchange said in a statement.
The rules are in addition to two other debut-day circuit-breakers under which trading is suspended for 30 minutes if shares in a company move up or down 20 per cent from the opening price, and then another 30 minutes for a 50-per-cent shift.
The bourse said the restrictions for the long-anticipated ChiNext growth enterprise board - which will be based in Shenzhen - would help curb risks, maintain market stability and protect investors.
"The size of share offering in the growth enterprise market is often not large; therefore, if investors blindly follow the trend, buying and selling stocks, prices are very vulnerable to wide swings," the exchange said.
No date has been set for ChiNext's launch.
The official Shanghai Securities News reported that the initial public offerings of the first batch of 10 small- and medium-sized companies slated to list on the second board has attracted strong interest from institutions.
The 10 companies now aim to raise up to 6.68 billion yuan (US$977.5 million), more than double the 3.16 billion previously planned, according to statements filed with the Shenzhen bourse.
The companies will take subscriptions for their initial public offerings on Friday, and analysts have expected the second board will be launched soon after the country's week-long National Day holiday, which ends on October 8.
Regulators hope ChiNext will help fuel the development of start-ups and other companies with high-growth potential in the world's third-largest economy, following the example of Wall Street's Nasdaq.
But there have also been worries that the new board may see excess speculation as investors, keen to make quick profits, often stir up prices of new stocks on their first trading day.
- AFP/yb
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