SHANGHAI: China's stock watchdog has begun a formal investigation into allegations of insider trading linked to a US$4.4 billion deal calling for a midsized construction company to build a massive housing development in Angola, the company said Thursday.

Trading in Hangxiao Steel Structure's shares was suspended Wednesday after its share price surged nearly 27 percent from Monday following a 10-day suspension. The China Securities Regulatory Commission notified the company Wednesday that it was subject to an investigation.

Hangxiao announced on March 14 that it had won contracts worth 34.4 billion yuan, or US$4.4 billion, to build a huge housing development near the Angolan capital, Luanda.

Hangxiao's shares were suspended from trading from March 19 after its shares rose by the daily maximum of 10 percent for 10 straight sessions.

Hangxiao's shares briefly resumed trading Thursday but were suspended after they fell by the daily minimum of 10 percent, to 12.41 yuan.

The company's notice to the Shanghai Stock Exchange acknowledged the investigation but gave no details. State media reports said its executives are suspected of releasing information to employees in violation of disclosure rules.

China first announced a crackdown on insider trading in 2000, but investigations and prosecutions have been rare. Detailed rules specifically forbidding directors and managers of listed firms from speculating in their companies' stocks were not issued until February this year.

Separately on Thursday, the Shanghai Stock Exchange issued rules requiring listed companies to improve their monitoring of executives with access to information subject to disclosure rules.

Companies must set up information-disclosure systems, clarify which types of information should be subject to such rules and ensure fair access to information for investors, analysts and the media, according to a notice on the stock exchange's Web site. Companies must comply with the new regulations by June 30, it said.