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Chinese shares jumped by 2.7 percent Monday following the announcement of accelerated experiments to tackle the country's structural flaw of the capital market.
The leading stock index of the Shanghai Stock Exchange, one of China's two bourses, rose 30.01 points, or 2.76 percent higher Monday to close at 1,115.6 points. Total trading volume for the market stood at 10.14 billion yuan (1.23 billion US dollars).
The composite stock index of the Shanghai bourse, which covers yuan-denominated A shares and foreign-currency B shares listed on the bourse, bounced back over the 1,100 point level after hitting Monday's low of 1,073.41 points in morning session.
Meanwhile, the Component Stock Index on the Shenzhen Stock Exchange, closed at 2,868.04 points, up 77.40 points, or 2.77 percent, from Friday's close. Trading volume for the market totaled 7.6 billion yuan (931 million US dollars).
Liu Mingsheng, an analyst with the Hualin Securities Co., said the strong rebound of the indices were mostly attributable to the accelerated experiments by the regulator of the markets, which gave market participants the impetus to buy shares of smaller bluechip listed firms with sound economic performance.
The China Securities Regulatory Commission Sunday made public the namelist of the 42 domestically listed firms, including the country's steel giant Baosteel and hydroelectric giant Yantgze Power, for its second round of experiments to make it possible forall those firms to sell their non-tradable shares on the stock markets.
A leading official with the commission said the firms were selected for the experiments following the conclusion of the first round of experiments launched on March 9, which involved only fourfirms.
Wu Jie, an analyst with the United Securities Co,, said the strong rebound indicates the technical rebound since June 8 has not been over yet despite downward readjustments in the past few trading days.
"Chances for the indices to rise are greater than the risks," said Wu.
Only one third of shares of China's domestically listed firms, which totals 1,300, are tradable on the domestic stock markets, and about two thirds of the shares of the country's domestically listed firms, mostly State-owned, are not tradable.
That structural problem puts public investors in a worse position than the actual controllers in making corporate policies and disposing of the firms' profits and assets, and has been blamed as one of the major factors for China's sluggish stock markets.
Under the regulations on the experiments to solve the problem, majority and minority stock holders have to reach agreements on ways to solve the non-tradable share problem and find a mutually acceptable arrangement through consultation.
The regulations require two thirds of votes of minority stock holders with voting rights or more to pass the final solution to the non-tradable issue problem at the corporate stock holders' session, a requirement designed to protect the legitimate interests of the minority stockholders.
(Xinhua News Agency June 21, 2005)
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