Strengthening measures to protect management rights of state-owned enterprises
China has decided to temporarily suspend lending of non-trading stocks starting from the 29th. It is evaluated as part of a stimulus package to prevent further decline in the stagnant stock market.
In a notice posted on WeChat on the 28th, the China Securities Regulatory Commission (SCSC) said, “In order to strengthen the management and supervision of lending of non-circulating stocks and improve the loan and lending (stock lending) transaction system, lending of non-circulating stocks will be temporarily suspended from the 29th.” “We will suspend it and implement some restrictions on lending transactions from March 18th,” he said.
Non-circulating stocks are the opposite of circulating stocks that circulate freely in the stock market, and are used in China to protect the management rights of state-owned enterprises rather than individual investors and to prevent the infiltration of foreign capital.
It is similar to the ‘protected reserve’ system, which is a system that locks the stocks held by the largest shareholder of a newly listed company from being traded in the market for a certain period of time, but the non-trading stock system is not a measure to protect individual investors, but rather to protect the management rights of state-owned enterprises and protect against foreign capital. It is a system established with the intention of preventing the infiltration of
The measure, which will take effect on March 18, limits the efficiency of some securities lending in the securities refinancing market. Securities finance companies that borrow stocks from institutional investors will secure stocks from the next day, rather than ‘immediately.’
The Securities and Exchange Commission said, “Going forward, we will place the fairness of the system in an important position and strengthen supervision and management,” adding, “We will evaluate the effectiveness of (measures) in a timely manner, protect market order in accordance with the law, and guarantee the legitimate rights and interests of a wide range of investors.” emphasized.
In response to the Chinese stock market slump, the authorities are rolling out a series of stimulus measures.
On the 24th, the People’s Bank of China announced that it would lower the deposit reserve ratio (reserve reserve ratio) by 0.5 percentage points starting February 5, providing the market with about 1 trillion yuan (about 186 trillion won) of long-term liquidity.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.