BIZCHINA / Weekly Roundup
Loose lips give tips?
By Leo Zhang (Shanghai Daily)
Updated: 2007-04-02 10:53
As bigger volatility seems to be taking the shine off yuan shares after a
blistering 2006, investors may find themselves at a loss amid floods of
market talks on corporate restructuring and take-over deals.
The problems are so serious that regulators have finally decided to step
in. Probes started last week into firms whose shares sprinted before
price-sensitive news was unveiled publicly while more rules are in the
pipeline to battle against insider trading.
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China's benchmark Shanghai Composite Index, which soared 130 percent last
year, adopted a seesaw pattern in the first few months of this year as
people pocketed gains after analysts warned them against market bubbles.
As the broad rally seemingly comes to an end, some market participants
are struggling to stoke up sentiment through digging out companies with
possible "positive themes" such as asset-injection plans or take-over
transactions.
A majority of the so-called "secret information" posted on the bulletin
boards of financial Websites proved to be wrong, plaguing stocks involved
with big ups and downs and leaving credulous investors high and dry.
For firms with real stimulus information, investors often surprisingly
found that their stock prices had risen by leaps and bounds ahead of
official disclosures, and even before market talks circulated.
"Regulators deemed it important to keep the market steady and prevent
investor unrest due to resurgent stock-related misbehavior," said a
Shanghai-based source close to the watchdog.
"They were serious about the probes and would severely punish people
responsible for misconduct with measures to even ban them from entering
the stock market for life."
Mainland stock regulators last week launched an investigation into
suspected insider trading involving Hangxiao Steel Structure Co, whose
stocks soared by daily limits for six sessions in a row before the
disclosure of a huge contract.
Although Hangxiao said its huge contract to build housing projects in
Angola is authentic, doubts were mounting if anyone benefited from
getting the news early and buying the firm's shares.
Xinhua news agency, citing an insider, reported on Thursday that
Hangxiao's Chairman Shan Yinmu had said at the firm's annual conference
in February that sales were expected to surge to 12 billion yuan (US$1.55
billion) if it managed to sign huge overseas contracts.
A similar probe has begun into GF Securities Co's proposed takeover of
Shenzhen-listed Yan Bian Highway Construction Co for a back-door listing,
the Caijing Magazine said on Wednesday.
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