Government to Consider Resuming Same Day Trading System
Equity traders have believed that the government has considered resuming the same day stock trading system after a recent trading scandal have trap small investors in losing positions of by regulatory restrictions.
The Shanghai Composite Index lost around two thirds of their value since 2007 and regulators are struggling to restore the confidence of these investors. To achieve this China needs to have a vibrant market that will promote two of the proposed policy goals. Namely giving retail investors the alternative to the real estate investment that have fueled inflation and by giving Chinese firms viable fund raising tools other than borrowing from banks.
Current system implemented in 1995 the T+1 tripled in value after a mass speculation of the main index in two months. This prevents investors rushing in and out of position in one day. The regulators are hoping that this will discourage this sort of mentality of investment behavior which can lead to collapse. This was followed up by regulators by barring stocks from increasing or decreasing 10 percent in a single day further stopping momentum.
There are very few signs that the restriction has improved the stocks investor culture, but value oriented investors exited stocks and placed their funding into real estate and to high yield wealth management products