The Shanghai Stock Exchange (SSE) unveiled new rules on A-shares' suspension and resumption trading on Wednesday night.
The new rules stipulate that shares with equity restructuring issues can only be suspended for no more than 10 trading days. Moreover, shares falling under the acquisition ruling will be allowed to suspend their share trading for up to 5 trading days while other issues should not exceed 25 consecutive trading days.
Some companies have used the trading suspension period to hedge risks in China's A-shares market. The Shenzhen Stock Exchange (SZSE) said China's domestic stock market, when compared with some more mature overseas markets, has more excuses for trading suspensions. Meanwhile, suspension periods are more extensive when compared with their western counterparts.
The new rules will close these loopholes to prevent behaviors that may hurt investors' interests as well as distorting share prices.
The MSCI indexes tracking China's A-shares have suffered from arbitrary suspensions before, said Morgan Stanley Capital International (MSCI), a leading index provider worldwide, and some companies' endless suspension periods had affected investors' share trading on a daily basis.
"The move will lead China's A-shares market to strive towards a long-term healthy development in the future," said Yang Delong, an analyst from the First Qianhai Fund, "It helps to relieve foreign capital's concerns on suspension rules in the A-shares market and prompt more overseas funds to flow into it. Also, the new rules will be favorable for the MSCI and the FTSE Russell to consider increasing the weight of China's A-shares."
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