November 14, 2018 / 1:37 AM / 10 months ago

Shenzhen exchange warns on speculation after abnormal price movements

SHANGHAI, Nov 14 (Reuters) - The Shenzhen Stock Exchange has called for stronger information disclosure and a strengthening of real-time monitoring of abnormal transactions to guard against speculation after two troubled firms saw their share prices surge.

In a statement on its website citing a spokesman, the exchange said shares of Hengli Industrial Development Group Co Ltd had a price-earnings ratio of nearly 2,800 despite the company posting a loss for the first three quarters of the year and not showing any significant improvement in its operating conditions.

“The recent rise of the company’s shares in the secondary market have seriously deviated from the company’s fundamentals, and there is a clear risk of secondary market speculation,” the spokesman said.

The exchange also said Changsheng Bio-technology Co Ltd had risen by the daily limit for four consecutive days, despite the risk of suspension or delisting after failing to release its half-year report within the required time period. It has also received administrative punishments from the China Food and Drug Administration and the Jilin provincial food and drug regulator, and has been slapped with penalties from the country’s securities regulator.

The exchange said that the gains in the two companies’ shares showed “clear characteristics of speculation”, with individual investors making up 97 percent of purchases and more than 90 percent of sales, with an average holding period of one to two days.

Reporting by Andrew Galbraith Editing by Shri Navaratnam

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