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Bloomberg
China’s investors are bracing for a major shakeup in the nation’s stock market, which will affect everything from risk-control systems to margin financing, share pledging and exchange-traded funds.
For the first time in decades, some shares listed in Shenzhen will be allowed to move as much as 20% either way in a single session. It’s double the cap that’s been in place since 1996, imposed to limit swings in the country’s then-nascent stock exchanges. More than 3,000 shares across China fell by that limit on February 3, when markets reopened after a holiday to an escalating coronavirus crisis.
The new rules will apply to technology-focused ChiNext board, a $1 trillion market where speculative trading is rampant. Many of its biggest stocks, like Contemporary Amperex Technology and Wens Foodstuffs Group feature in benchmarks like the FTSE China A50 Index or the CSI 300 Index. While no date has been set for the changes, fund managers, brokerages and day traders are preparing for the potential increase in volatility.