Trading cap end unlikely in short term
While removing the trading cap on the limit on how much a stock can gain on its trading debut adds some positive signs to further reforms of China's capital market, the move is not likely to take place in the short term as the Chinese mainland stock market is not yet fully mature.
Yang Delong, chief economist with Qianhai Open Source Fund Management, said removing the maximum permissible limit on the first day of trading is necessary and will become a significant step forward in the market reform of the IPO pricing scheme and alleviate the significant fluctuation of stock prices.
"The current limit only works on the first trading day and yet does not help to reflect a reasonable price-earnings ratio afterward - shares often climbed too quickly days after companies made their debut," he said.