When 3,000% Price Swings Are a Sign of Maturity
China has resisted the urge to intervene in the wild trading on ChiNext. That’s progress.
The training wheels have come off for ChiNext.
Photographer: Getty Images/Getty Images
In the past, Beijing has responded to wild swings in its stock markets with regulatory crackdowns. This time is likely to be different. That’s why investors should see gyrations as wide as 3,000% in shares on Shenzhen’s ChiNext market as a sign of emerging maturity.
The 18 companies that made their trading debuts on the Nasdaq-like board last week rose an average of 200%, under revamped rules that remove limits on price moves for newly listed stocks. Previously, shares were restricted to a maximum increase of 44% or a decline of 36% on their first day of trading. For existing stocks, the daily limit on price movements has been doubled to 20% from 10%.