The latest warning came on Wednesday, in which the bourses said the danger of delisting now looms near for six PT firms and investors should be aware of risks involved.

The six firms are Shuanglu (Double Deer), Nongshangshe, Shuixian (Narcissus), Wangdian, Hongguang and Zhonghao.

PT stocks are those that have reported losses for three consecutive years and have been suspended by the bourses. The trading of such stocks can only be done on Friday.

The warning named four situations for which the stocks would be delisted: failure to produce annual reports before April 30; failure to obtain a grace period from the bourses; failure to apply for a grace period within 45 days of the publication of annual reports; and reporting red figures on interim reports upon obtaining a grace period.

Financial analysts said the April 30 deadline will be the first major test for the six firms.

The firms have to produce a feasible turnaround plan that will be convincing enough to the bourses to obtain a grace period.

In their history of more than a decade, the Shanghai and Shenzhen bourses have never delisted a stock. Though the rules for a delisting have been there for a long time, they have been ambiguous and never enforced.

To some analysts, the situation should be held at least partly responsible for rampant price manipulation of ST (special treatment for stocks reporting losses in two consecutive years) and PT stocks, the increasing number of ST and PT stocks (at the moment 49 and eight, respectively) on the two bourses and the far-from-satisfactory performances of 1,000-odd listed firms.

Amid mounting pressure for consecutive loss-making firms to be delisted, the China Securities Regulatory Commission, the watchdog of the securities market, issued procedures for suspension and delisting of stocks in February.

The move has been widely welcomed as one that will benefit the healthy and sustainable development of the stock market in the long run.

(People's Daily 04/13/2001)