SSE orders 43 firms to warning board

A total of 43 junk shares listed on the Shanghai Securities Exchange (SSE) will be moved to the exchange's recently established risk warning board on January 4, the first trading day following the three-day New Year's holiday.

Specifically, 23 listed companies bearing special treatment (ST) marks as well as 20 enterprises with delisting risk warning (*ST) marks will be traded on the risk warning board starting Friday, according to interim measures issued by the SSE in mid-December on share trading at the new board. Stocks sentenced to delisting will also be traded on that board, yet so far no companies listed on the SSE have been ordered by exchange officials to wind up public trading since the introduction in April of a draft outlining tougher delisting regulations.

The new board is meant to alert investors of risky equities and also act as a deterrent against speculation. Among other mechanisms the exchange has built into the board, if an ST or *ST share fluctuates by more than 15 percent over the course of three consecutive trading days, the SSE will release the names of the top 5 securities brokerages buying or selling the stock during periods of abnormal adjustment along with details on their total transaction volume.

ST and *ST stocks traded on the risk warning board will be governed by a 5-percent fluctuation limit, unchanged from previous trading rules. A-shares that close below 0.05 yuan ($0.008) will be permitted to go up or down by 0.01 yuan per day; and for B-shares that close under $0.005, their daily limit will be $0.001. The daily limit for stocks facing delisting is 10 percent, according to the SSE.

Pulling junk shares from the main board may lead to sharper drops in their share prices, Li Bo, an analyst from GF Securities, told the Global Times. "Some *ST companies may see their share prices fall below 1 yuan as the risk of delisting hangs over them," Li said.

Shenzhen-listed companies bearing ST or *ST warnings will be allowed to stay on their original trading board. The Shenzhen Stock Exchange will relocate shares set to be delisted to a new delisting board as well, where they can trade for 30 trading days. When the 30-day period expires, they can list on national or regional over-the-counter markets.