China Lifts Moratorium on Stock Sales

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SHANGHAI, China (AP) -- Stocks rose early Monday after China ended a yearlong moratorium on new share sales by companies already traded on its exchanges, though plans for resuming initial public offerings remained unclear.

The rules issued by the China Securities Regulatory Commission cover additional share offerings, convertible bonds, share-purchase rights offerings and other types of securities but did not specifically mention IPOs.

They took effect Monday after the markets reopened following a weeklong national holiday.

The Shanghai Composite Index gained 36.23 points, or 2.5 percent, by midmorning to 1,476.45, up from its April 28 close of 1,440.22. The Shenzhen Composite Index rose 7.43 points, or 2 percent, to 361.37.

After months of languishing at multiyear lows, the Shanghai benchmark has risen 24 percent since the beginning of the year and the Shenzhen index 27 percent.

''The market is flush with money now, so there is no need to worry about a sharp decrease in funds,'' said Simon Wang at Xiangcai Securities.

New share issues would require regulatory approval and would likely not begin immediately.

China suspended fund-raising activities a year ago as companies began converting nontradable, mostly government-held shares into tradable equity.

The nontradable shares once constituted about two-thirds of the market capitalization in the mainland markets and were a legacy of the state-run, planned economy.

Officials recently announced that more than 70 percent of the companies with shares traded on the exchanges have completed the reforms, allowing new stock offerings to resume.

Analysts said they expected the partial resumption of share sales to attract more investors to the markets. Regulators are approaching IPOs more cautiously, given investors' fears that new shares might flood into the markets, exceeding demand and pushing prices lower.