China Stock Trades Halted for 66 Firms in Sichuan

China Stock Trades Halted for 66 Firms in Sichuan
05-13

The decision to suspend trading for companies in the rattled province was a first for the Shanghai exchange and followed a communications breakdown.


Reacting to a powerful earthquake in Sichuan Province, the Shanghai and Shenzhen bourses suspended stock trading for 66 companies based in the southwestern province and nearby Chongqing Municipality, effective May 13. Trading was to resume only after the companies file reports describing how their businesses were impacted by the 7.9 magnitude seismic shock.

It was the first time that the Shanghai Stock Exchange (SSE) halted trading of company shares due to a natural disaster. Caijing learned SSE officials held meetings that started within hours of the disaster and stretched into early morning May 13, and discussed whether to open the exchange the day after the quake.

According to China's securities regulations, an exchange can close temporarily if a natural disaster affects a significant number of brokerage trading halls or forces a large number of public companies to go belly up.

No trading hall are located in Wenchuan County, the quake's epicenter.

The mainland exchanges opened as usual on the morning of May 13, but without shares for the 66 companies on the trading floor. SSE lost contact with 45 of its listed public companies in the Sichuan region due to communications disruptions and suspended their stock trades pending restoration of data services. Another 21 companies that list in Shenzhen were frozen on that exchange for the same reason.
In the wake of an information blackout following the quake, SSE officials told Caijing they were considering using satellite phones to make emergency connections with member companies.