Regulators Warn Investors of Risks in China's New Trading Board

妖妖 2009年11月02日15:12 来源：CRI 点击次

The new ChiNext board will debut on Friday with over nine million registered investors.

However organizers and regulators are warning of the potential risks in investing in the new board.

Shang Fulin, chairman of the Chinese Securities Regulatory Commission, tells investors to invest wisely.

"Companies listed on the new board have immature operating, management and marketing mechanisms. Some of them have unstable shareholding and governance structures. They are far less stable than enterprises on the main board."

One of ChiNext's greatest challenges will be distinguishing itself from the traditional boards. Originally conceived in the late 1990's, the new board was postponed time and again due to fluctuations in the market and continuous scandals that rocked the Shanghai and Shenzhen boards.

Analysts and regulators are warning investors that the new board will face "relatively high" risks from market speculation and manipulation.

Analysts are also expecting high price fluctuations in the first days of trading. The 28 companies on the board have already raised 16 billion yuan, or $2.3 billion US dollars, in their initial public offering, more than double the forecast.

An investor surnamed Qian says the high prices could leave many investors in the cold.

"I am most worried about the high price to earnings ratio. Personally speaking, it's impossible to fully invest in this market if you rely on a salary."

Liu Jipeng, an economics professor at the Chinese University of Political Science and Law, warns investors not to get caught up in the hype surrounding the new board.

"Please remember that they are stocks with all the shares tradable. Moreover, ChiNext investment is just like risk investment, where calm and caution are very much required."

To tackle potential risks, the China Securities Regulatory Commission promises to implement stricter rules and punishments for investors and companies who intentionally manipulate prices. A special department within the agency will be set up to ensure proper trading. Moreover, the new board is planning to temporarily suspend trading if listings rise too much.

Meanwhile, the Shenzhen Stock Exchange has wasted no time by imposing a two month trading restriction on three accounts on the ChiNext board and sent warnings to over ten other investors to avoid price speculation on the first day of trading.

The three suspended accounts have been assused of grossly manipulating market prices.

Larry Chen, CRI News.

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