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China's top securities regulator has vowed to continue the experiment of floating the nontradable shares in domestic listed companies.
But, in a move designed to reassure those nervous about the scheme, he also pledged to control the pace of reform and balance demand with fund supply to ensure market stability.
New regulations will also be rolled out to curb insider-dealing and speculation during the experiment and protect the lawful interests of public investors.
"There is no return for the reform of solving the split share structure of listed companies...It will not be halted," Shang Fulin, chairman of the China Securities Regulatory Commission (CSRC), told the Xinhua News Agency in an interview published yesterday.
The experiment will be expanded to more listed companies once the CSRC has drawn experience from the pilot schemes, he said.
His interview marked the first occasion the securities regulator has commented on the issue since the experimental floating of nontradable shares began last week.
The market staged a mixed response to the flotation - though some of the pilot firms surged, stock indices generally moved downwards.
The benchmark Shanghai composite index lost 4.6 per cent last week, further edging down 1.1 per cent to close at 1,095.47 yesterday.
But Shang defined the market correction as "a stable response", saying investors are still cautious of the experiment during the initial stages, adding that it will take time for the stock prices to become settled.
Shang made assurances that the pace of reform will be balanced with market capacity and said there is unlikely to be a flurry of sales of nontradable shares in the near future.
To stabilize market order, the CSRC will also set out regulations to protect the interests of public investors and tradable shareholders, and prevent irregularities such as insider-trading and speculation, Shang said.
More parallel reforms are also expected, including allowing more lawful funds to enter the bourses and favorable tax policies to encourage stock investment.
(China Daily May 17, 2005)
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