Shanghai to widen daily price band
By Li Xiaowei (China Daily)
Updated: 2006-06-14 11:44 The move would attract more funds, especially from institutional investors,
into blue chip stocks and boost the index as a whole, according to
analysts.
"Increased liquidity for the 50 blue chip stocks would boost
their market multiples, many of which are relatively low as compared to
developed markets," said Wu Jianxiong, an analyst with Guotai Jun'an
Securities.
Allowing investors to buy and sell stocks on the same day
will provide investors with greater flexibility to take advantage of short-term
swings in share prices, while margin trading will give them the leverage to play
the market, said analysts.
Currently all stock trades on the mainland
market are settled on the next business day following a transaction. Only stock
warrants are allowed to be traded on the same day.
"Given the tremendous
popularity of stock warrants, we could imagine what a big impact the proposed
trading rule would have on the market," said Chen Li, a analyst with Shenyin
Wanguo Securities.
Since the introduction of stock warrants in August
last year, the combined turnover in Shanghai and Shenzhen has overtaken Hong
Kong, making the Chinese mainland the biggest market for the investment
instrument.
The latest trading indicates that the combined turnover in
stock warrants on the China market now equals stock warrants traded everywhere
else in the world put together.
However, the proposed same-day trading is
expected to apply only to a selected number of stocks, said Chen.
The
Shanghai bourse revealed these trading plans a day after it released its
first-ever market quality report, which has provided the basis for further
improvement, said the exchange official Liu.
(For more biz stories, please visit Industry Updates)
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