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Financial package may put on hold
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China may delay the launch of its planned growth board, stock index futures and the margin trading and securities lending scheme until after the Olympic Games, industry sources said.

The sources said the moves could be delayed until next year to stabilize the market following the earthquake disaster and the Olympics, industry sources said.

"The earliest debut of China's Nasdaq-like growth board should be after the Olympics, considering the request of market stability during the event and the impact of the recent earthquakes in Sichuan Province," said Wang Shouren, secretary general of the Shenzhen Venture Capital Association.

He said about 300 qualified companies were in the pipeline to be listed on the growth board. But the ideal scale should be expanded to more than 1,000 when the board is officially launched.

The Nasdaq-like growth board aims to assist the development of start-up companies with a lowered threshold for companies to get traded publicly.

China has wrapped up basic preparations for the launch of a growth board, stock index futures, margin trading and securities lending, said Shang Fulin, chairman of the China Securities Regulatory Commission, during the Lujiazui Forum in Shanghai earlier this month.

But a time frame has not been set due to concerns of rocking the already fickle stock market, Shang said.

China introduced a package of supportive policies, including the restriction of bulk trading for new shares after the lock-up period and the reduction of stamp duty on stocks. But the market remained volatile and showed a weak recovery.

Stock index futures, which allow Chinese investors to sell short for the first time, will be launched after the Olympics, or even next year, said Chen Donghua, president of the China International Futures Co Ltd.

"Some mock trading programs have shown the stock index futures can aggravate the market volatility. So the regulator may need a longer time to work out a way for effective risk control," Wang said.

Earlier, people expected the stock index futures to be launched in the first half of this year, followed by the launch of the margin trading and securities lending scheme.

(Shanghai Daily May 27, 2008)

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