The new rule, effective from the beginning of next year, will bring China’s stock market in line with the international practices.

Under the new regulation, the habitual money-losing companies are required to start releasing their quarterly financial reports from the beginning of the year.

The existing rule requires the publicly traded companies to announce their financial results only twice a year.

The new measure was welcomed by securities analysts.

“This means the securities regulator is stepping up efforts to supervise the market,” said analyst Ji Minbo with Northeast Securities.

“It will greatly enhance transparency,” said Gu Qing, an analyst with Haitong Securities.

The half-year period is too long, and it’s not good for investors. After the new rule becomes effective, investors will benefit most, especially the retail ones, Ji added.

Primarily, the new regulation is aimed at preventing some listed firms from using the loopholes of the existing rule to publish false or misleading information in financial reports.

“Comparatively, it is easy for some firms to give false information in their half-year financial reports,” said Haitong’s Gu. “To release a financial report every three months will make it nearly impossible for them to do so, as they will be closely monitored,” she added.

The new quarterly report, which is expected to be more complicated than a statement but simpler than an interim report, certainly will add workload to the listed firms.

“Though the additional work may be troublesome for them, it is inevitable,” said Gu.

Both analysts agreed that the new regulation won’t increase the listed firms’ financial burden much.

“It won’t cost too much, as the quarterly results won’t be audited. It’s a common practice worldwide,” said Gu.

On average, a listed company pays between 400,000 yuan (US$48,200) and 500,000 yuan to publicize their interim and annual reports.

(Shanghai Daily 10/19/2000)