China to cut max­i­mum length of stock trad­ing halts

The Star Malaysia - StarBiz - - Foreign News -

HONG KONG: Chi­nese au­thor­i­ties said they will re­duce the amount of time stocks can stay sus­pended, ad­dress­ing a long-stand­ing con­cern that in­vestors can be left stranded for months, un­able to sell.

The China Se­cu­ri­ties Reg­u­la­tory Com­mis­sion (CSRC) made the an­nounce­ment on its web­site late Tues­day. Un­der ex­ist­ing rules, com­pa­nies can sus­pend their shares for as long as three months for “ma­jor as­set re­struc­tur­ing,” which can in­volve lit­tle more than shuf­fling as­sets from one unit to an­other.

Share halts in China have been a ma­jor is­sue for in­vestors in re­cent years. Nearly half of the stock mar­ket was sus­pended at one point dur­ing the 2015 crash, trig­ger­ing re­bukes from MSCI Inc and many in­ter­na­tional in­vestors.

In­dex com­pil­ers in­clud­ing MSCI made changes to sus­pen­sion rules a con­di­tion for in­clud­ing Chi­nese stocks in their global bench­marks, to re­duce the risk that in­vestors will be un­able to trade when they want.

Com­pared to in­ter­na­tion­ally ma­ture mar­kets, trad­ing halts in China are still too fre­quent and too long, the CSRC said.

It didn’t say what the new max­i­mum halt length will be, nor when the new rules will be in­tro­duced, though it did say that shares should not be sus­pended dur­ing a com­pany’s bankruptcy re­struc­tur­ing pe­riod.

While Chi­nese com­pa­nies have been known to halt trad­ing to buy time with credi- tors, such sus­pen­sions have been rare dur­ing the lat­est sell­off.

Halted stocks amounted to about 2% of the na­tion’s pub­lic com­pa­nies yes­ter­day, com­pared with 6% at the end of last year.

Stocks sus­pended 50 days or more are re­jected or dumped from bench­marks un­der in­dex providers’ rules. ZTE Corp and China Hainan Rub­ber In­dus­try Group Co were among five sus­pended stocks ex­cluded from the MSCI China In­dex in May.

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