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
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
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
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.
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