Stocks slip after violent swings
Updated: 2007-08-10 16:20
As the stock indices have recently kept reaching new highs, the total market value also surpassed previous records. The total value of all securities on the two exchanges has grown 6.6 times in the past two years since July 28, 2005. By yesterday's closing, the total market value was 21.14 trillion yuan, larger than the gross domestic product last year of 21.09 trillion yuan.
The total market value of all securities in the Shanghai bourse reached 16.36 trillion yuan, including 4.68 trillion yuan of floating shares; the market value of the Shenzhen exchange was 4.78 trillion yuan, including 2.4 trillion yuan in floating shares.
It is worth of noting that new stocks issued in the past year contributed nearly 10 trillion yuan in the total 21.14 trillion yuan market value, according to WIND Info, a leading consultant firm.
Since June 19 last year when the securities regulator started approving initial public offerings (IPOs) from a year-long suspension, 126 companies went public on the domestic market and their total market capitalization was 9.6 trillion yuan by yesterday.
Of the new shares, the Industrial and Commercial Bank of China had market value of 2.18 trillion yuan on the top, followed by Bank of China with 1.48 trillion yuan and China Life with 1.38 trillion yuan.
More IPOs are in the pipeline for this year. After most of the banks and major insurance companies went public, the spotlight was on securities houses in the next round of the IPO wave. Merchants, China Orient, Everbright, Huatai and Guotai Jun'an are the five brokerages that have entered concrete IPO preparation processes, and are running for the first listed securities firm in the second half, sources said.
However, with the affluent capital flooding into the market, higher volatility is expected, said analysts. Especially for new shares listed on the small- and medium-sized enterprise board in Shenzhen, price manipulation is a problem due to their smaller share bases. Recently there were a few stocks rising over five times their original value on the first trading day, followed by slumps in the following days.
Concerning the matter, the Shenzhen Stock Exchange has issued a series of measures to prevent malicious biddings including keeping a closer eye on accounts detected of abnormal trading. In its latest move, the bourse said today that if a stock price changes over 150 percent on the opening price change spree, the stock will be suspended for trading for 30 minutes. If again it fluctuates over 200 percent after the suspension, it will be temporarily stopped for another 30 minutes. The current policy, a 15-minute suspension on at 50 percent and 90 percent, still applies.
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