New capital market rules spread cheer

China's resolve to rein in illegal activities in the securities trade through timely rules and regulations is integral to the sound development of the capital market, which will strengthen the national effort for high-quality development, experts said.

Their comments were in response to the release of a joint guideline on Tuesday by the General Office of the Communist Party of China Central Committee and the General Office of the State Council, China's Cabinet.

The guideline, comprising 30 rules, aims to crack down on illegal practices in securities trade, improve regulation of cross-border data flows and data security, and punish issuance of fraudulent securities, market manipulation and insider trading.

Cheering the prospects for safer markets, the benchmark Shanghai Composite Index climbed 0.66 percent on Wednesday while the Shenzhen Component Index gained 1.86 percent.

The guideline marks the first time the two central bodies have jointly released a document to crack down on violations of securities-related rules and regulations, said Yi Huiman, chairman of the China Securities Regulatory Commission, in an interview with Xinhua News Agency on Tuesday.

Yi explained the guideline marks a new start in China's modern capital market governance system, which promises stronger capability in preempting frauds.

It will deepen reform of the capital market and further advance its high-quality development.

"The Chinese capital market has undergone profound structural changes over the past few years and become more market-oriented. The latest guideline will help attract more market entities and retain them, serving the country's goal of seeking high-quality economic development," he said in the Xinhua interview.

Over a period of three to five years, the securities regulator will complete the targets set in the guideline and provide more solid legal guarantee to build a well-regulated, transparent, open, vibrant and resilient capital market, Yi said.

Lian Ping, chief economist of the Zhixin Investment Research Institute, said the guideline covers the capital market comprehensively, aiming to eliminate all possible perils and risks.

The 30 rules are quite practical, and expand the range of law enforcement by including requirements such as setting up coordination teams to crack down on market crimes.

For instance, rules for building systemic strengths should help introduce professionalism in law enforcement. They, however, may not show immediate effects, but their long-term benefits will help reduce flouting of rules at a fundamental level, he said.

The guideline called for the supervision of Chinese firms listed offshore, especially in terms of confidentiality and record management. It also urged fresh measures to tackle risks or emergencies of such companies.

Tuesday's guideline came close on the heels of the Cyberspace Administration of China's order on Sunday to remove ride-hailing Didi's app from the mobile app stores in China due to alleged illegal collection of customer data.

The ride-hailing giant, which debuted on the New York Stock Exchange on June 30, saw its shares tank by 20 percent on Tuesday.

US-listed Chinese companies Full Truck Alliance and Kanzhun also fell 15.95 percent and 6.68 percent, respectively, on Tuesday after the CAC on Monday announced cybersecurity investigations into their affiliated businesses.

Other US-listed companies were affected as well. Shares or American depositary shares of property brokerage Beike shed 10.29 percent, those of streaming platform Bilibili slid 9.13 percent and those of e-retailer Pinduoduo dropped 5.12 percent.

David Chin, head of investment bank in Asia-Pacific for UBS, said in a news conference on Wednesday that data security is of great importance to any country. While it is yet to ascertain what kind of further measures will be taken, more details can be expected in the following two months.

"China's internet titans have benefited from overseas listings over the past few years. The overall trend will not change while some specific listing procedures will likely be adjusted," he said.