The Shanghai Stock Exchange yesterday announced that it is
raising the upper limit for the bidding price of stocks on their
first day of trade.
The upper limit is being raised from the current 200 percent of
issue price or the last closing price to 900 percent. The lower
limit remains at 50 percent. All biddings higher than 900 percent
or lower than 50 percent will be regarded as invalid.
The stock exchange warned investors that the new regulation can
only be applied to stocks that are not subject to the first trading
day price fluctuation limit.
These stocks include those of companies that have issued initial
public offerings (IPOs), companies that have issued their first
shares, the ones that have just completed their share structure
reform, and companies that have resumed trading after a period of
suspension.
"The new regulation can ease the hectic buying in the trading
period to some extent," said Zhang Yidong, an analyst at Industrial
Securities. "The amount of buying bids before the trading starts
jacks up the stock price in the trading period."
The Shanghai Composite Index rose 0.6 percent to close at
3743.96 yesterday, rebounding from a loss of 1.8 percent in the
morning session. The turnover on the exchange was 175.5 billion
yuan, down from the record high of 203.9 billion yuan on Tuesday.
Only 329 out of 907 stocks closed higher.
Financial stocks, which are heavily weighted in the index, led
the rally, shrugging off the influence of other falling stocks.
Huaxia Bank rose to its daily limit to close at 13.26 yuan. Bank
of China increased 3.14 percent to close at 5.76 yuan while Ping An
climbed 1.6 percent to close at 5.76 yuan.
Analysts said the temporary drop in the morning session was
partly caused by fears of policy tightening that triggered
profit-taking.
"Rumors, such as the government may publish an editorial to warn
the risks in the stock market and that interest rates may rise
soon, may have led some investors to sell," said Chen Wenzhao, an
analyst at Changjiang Securities.
But Industrial Securities' Zhang said the stock market will
maintain the upward trend, with periodic fluctuations.
(China Daily April 26, 2007)