Shanghai Stock Exchange steps up risk control measures

Updated: 2007-05-28 13:47

The Shanghai Stock Exchange (SSE) on Monday ordered all Special Treatment (ST) companies to publicize a biweekly report to inform investors about possible risks, according to a statement.

Special Treatment (ST) stocks, which are shares in companies that have failed to earn profits for two years running or have been fingered for false accounting, have been darlings of speculative investors of late because of their capacity for sharp gains.

In an effort to maintain market stability, the SSE has laid down strict regulations on information released by ST companies.

According to the statement, the companies should reveal information on stock transfers, non-public offerings, debt restructuring, business reorganization and capital flows. The company and all its board members are responsible for the authenticity, accuracy and integrity of the statement. News releases are no substitute for formal statements.

The statement said companies which have not completed share holding reforms also have to provide information about where they are in the reform process.

An official with the SSE said small investors are vulnerable to irrational market fluctuations caused by rumors and hype. The bourse's action was aimed at providing better information on potential risks.

ST stocks have performed strongly for a week but last Friday they suffered a sharp setback with 24 shares dropping by the daily limit of 10 percent.

(For more biz stories, please visit Industry Updates)

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