ChiNext Surges as Companies Vow to Stabilize Market After Routby
China’s benchmark gauge of smaller companies rallied the most in two months after a group of 28 listed companies pledged to take action to boost investor confidence.
The C28 Club, comprising the first batch of ChiNext stocks, will "take real action to stabilize the capital market," Eve Energy Co. said in a filing to the Shenzhen stock exchange on Thursday on behalf of the group. The controlling shareholder of the maker of lithium batteries promised not to sell stock over the next six months, according to the filing. Eve Energy did not elaborate on what actions the companies will take.
The announcement fueled a rebound for Chinese stocks, with the Shanghai Composite Index closing 2 percent higher after earlier plunging below the lows reached during last year’s market rout and heading toward a bear market. The ChiNext surged 5.6 percent for the biggest gain since Nov. 4.
Investor confidence has been hurt by news about major shareholders cutting their stakes, Eve Energy said. The government announced last week that it would renew restrictions on the amount of stock shareholders can sell amid concerns about a weaker yuan and slowing economy. The Shanghai and Shenzhen stock exchanges on Thursday also vowed to step up monitoring of share sales by companies’ major shareholders.