When someone shares with you something of value, you have an obligation to share it with others.
Friday, 19 December 2008
Beijing Delays Stock Reform Plan
Beijing will delay the launch of margin lending and short selling on mainland stock markets as it needs time to fine-tune the mechanism, according to a senior regulatory official.
Beijing will delay the launch of margin lending and short selling on mainland stock markets as it needs time to fine-tune the mechanism, according to a senior regulatory official.
Zhuang Xinyi, vice-chairman of the China Securities Regulatory Commission, said the regulator was trying to maximise the positive effects of the reforms when they hit the market, admitting that its efforts might cause a delay, according to the Shanghai Securities News.
It is the first time that a securities official has openly indicated that introduction of the market-moving measures will be postponed. The measures were expected to debut early this month.
Sources said the regulator had not set a clear-cut timetable for the new trading mechanism. One source said not a single brokerage had filed an application to conduct the business so far.
In early October, the CSRC announced that it would pick several brokerages to start margin lending and short selling on a trial basis. It aimed to launch the trial run in early December, hoping the margin lending, under which investors can borrow money from brokerages to buy shares, could help stabilise the embattled market.
However, the State Council put the plan on hold last month as top government officials were concerned that rampant short selling could send the falling indices to even lower levels, according to sources.
Short selling allows investors to sell shares borrowed from brokerages.
“Short selling is risky for brokerages, which will lose money if the prices of the shares they lend to investors drop,” said TX Investment Consulting analyst Zhang Chunlei. “The regulator has to take market sentiment into account when it implements the trial programme.”
The Shanghai Composite Index fell below the 2,000-point level on Friday as investors rushed to take profit following a 19 per cent rally since November 4.
Analysts predicted the market would slip further in coming months amid disappointing company earnings.
Beijing has been striving to bolster the market to avoid social unrest. The central government has required Central Huijin Investment, an arm of the mainland’s US$200 billion sovereign wealth fund, to buy banking stocks to stem the market slide.
According to the National Business Daily, Huijin has spent 1.3 billion yuan (HK$1.47 billion) since September buying shares in the mainland’s three largest listed banks.
1 comment:
Beijing delays stock reform plan
Daniel Ren in Shanghai
18 December 2008
Beijing will delay the launch of margin lending and short selling on mainland stock markets as it needs time to fine-tune the mechanism, according to a senior regulatory official.
Zhuang Xinyi, vice-chairman of the China Securities Regulatory Commission, said the regulator was trying to maximise the positive effects of the reforms when they hit the market, admitting that its efforts might cause a delay, according to the Shanghai Securities News.
It is the first time that a securities official has openly indicated that introduction of the market-moving measures will be postponed. The measures were expected to debut early this month.
Sources said the regulator had not set a clear-cut timetable for the new trading mechanism. One source said not a single brokerage had filed an application to conduct the business so far.
In early October, the CSRC announced that it would pick several brokerages to start margin lending and short selling on a trial basis. It aimed to launch the trial run in early December, hoping the margin lending, under which investors can borrow money from brokerages to buy shares, could help stabilise the embattled market.
However, the State Council put the plan on hold last month as top government officials were concerned that rampant short selling could send the falling indices to even lower levels, according to sources.
Short selling allows investors to sell shares borrowed from brokerages.
“Short selling is risky for brokerages, which will lose money if the prices of the shares they lend to investors drop,” said TX Investment Consulting analyst Zhang Chunlei. “The regulator has to take market sentiment into account when it implements the trial programme.”
The Shanghai Composite Index fell below the 2,000-point level on Friday as investors rushed to take profit following a 19 per cent rally since November 4.
Analysts predicted the market would slip further in coming months amid disappointing company earnings.
Beijing has been striving to bolster the market to avoid social unrest. The central government has required Central Huijin Investment, an arm of the mainland’s US$200 billion sovereign wealth fund, to buy banking stocks to stem the market slide.
According to the National Business Daily, Huijin has spent 1.3 billion yuan (HK$1.47 billion) since September buying shares in the mainland’s three largest listed banks.
Post a Comment