Shenzhen bourse keeps close watch on SME-board theme shares

With regard to the speculative risk of theme shares on the small and medium enterprise board, a Shenzhen Stock Exchange official told reporters yesterday the bourse has taken a series of supervisory measures to monitor and control such stocks including Quanjude (002186).

Meanwhile, market experts warn retail investors of potential risks incurred by irrationally high prices of such stocks and advise them to exercise caution and prudence.

The latest price surges of some theme stocks on the SME boards have raised wide concerns and alarm of market insiders and regulatory authorities. The Shenzhen bourse is said to have conducted close monitoring of the stocks of Quanjude and Goldwind Science & Technology, and taken such measures as temporary trading suspension, phone calls to relevant member institutions and their business outlets, and issuing written warning letters. Trading restrictions will be imposed on those accounts with major trade irregularities or suspected of illegal practices.

Some industry experts expressed in yesterday's interviews that the irrational speculation of theme stocks on the SME board will finally return to rationality and high share prices with no solid performance backings will inevitably drop to a reasonable level. A senior researcher with a securities firm pointed out companies listed on the SME board generally face fierce competition in their respective sectors, some do poorly in utilizing the raised funds and risk unstable performances, some others still have flaws in corporate governance and weak awareness of standard operations. All these call for enough attention of investors.