Markets in Shanghai and Shenzhen registered solid gains Monday after the country's securities regulator issued a draft regulation late Sunday that would pave the way for staff at listed firms to take equity positions in their companies.
The Shanghai Composite Index added 22.12 points, or 1.04 percent, to close at 2,154.92; while the Shenzhen Component Index tacked on 1.49 percent, or 135.58 points, to finish at 9,212.20.
Both markets opened lower Monday, but climbed up throughout most of the morning session on strong showings from the developmental zone, environmental protection and rare earth sectors. Gains in coal, cement and petrochemical stocks gave the markets further support in afternoon trading.
The China Securities Regulatory Commission (CSRC) unveiled a draft regulation late Sunday that would open the door for staff members at listed companies to purchase shares in their own companies on the secondary market. Employees would be required to hold these shares for at least 36 months, a demonstration of faith that would likely spur investor confidence and thus buoy the prices on these stocks, analysts say.
This latest move by the CSRC is yet another measure aimed at boosting confidence in the country's unruly equity market, say analysts. Late last week, the regulator announced that it would cut trading fees at domestic bourses in order to take some of the financial pressure off investors.
Meanwhile, with several major economic indicators for July set to be released next week, investors are waiting to see how much China's consumer price index (CPI) expanded last month. Many in the market are predicting the growth rate to clock in below 2 percent, which may give the government more space to loosen monetary policy, according to analysts.
