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CSRC looks to reduce 'irrational' speculation

By Chen Jia (China Daily)

09:52, February 24, 2012

Investors who buy shares on the first day of trading, eager for short-term returns, help fuel speculative investments and disrupt share prices. Roughly 94.7 percent of new-share speculators made a loss, a statement by the China Securities Regulatory Commission said on Thursday. (Photo/China Daily)

Regulator says weak governance to blame for shareholder losses

BEIJING - China's top securities regulator is seeking methods to curb irrational speculation. The measures may include improving the delisting mechanism and a more efficient risk-warning system for private investors.

The main reason most private shareholders suffered serious losses over the past two years was immature governance of the capital market and a weak regulatory system, according to the China Securities Regulatory Commission in a statement released on Thursday.

"The regulatory agency is formulating policies to curb speculative investments, especially for IPOs and inferior stocks that drive share prices to irrational highs," the statement said.

Official regulations on public companies have not yet been released, although a draft of the rules was released by the CSRC in September 2007.

"The lack of supervision of listed businesses has slowed the development of China's securities market, leaving room for companies to chase short-term benefits by cashing out from the stock market," said Li Yongsen, a researcher with the Financial and Securities Institute at Beijing's Renmin University of China.

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