CHINA on Friday issued new rules to get loss-making companies or those in violation of regulatory practices to delist, in its latest move to improve stock market conditions, and vowed stricter enforcement of the guidelines.

    Traders say that market regulations have been too loosely enforced in previous delisting exercises.

    The China Securities Regulatory Commission (CSRC) published the rules, effective immediately, after seeking public feedback via a draft made public in July.

    The CSRC “will strictly carry out the new delisting rules, taking effective measures to ensure the delisting of any single firm that fails to meet regulatory standards, so as to protect the seriousness and authority of the delisting mechanisms,” the regulator said in a statement published along with the rules.

    Seventy-eight firms have been delisted from the Shanghai and Shenzhen stock exchanges since the early years of 2000 due mainly to successive years of poor earnings, official data showed.

    But since the first delisting of loss-making Shanghai Narcissus Electrical Co. from the Shanghai Stock Exchange in 2001, regulators have remained hesitant to kick firms off boards. They largely suspended the process in 2008 and only reactivated it this year as the government attempts to revitalize its stock markets.

    For many investors, the Chinese stock market has decayed into a “gambling den,” where companies make fortunes overnight just being listed, not a platform for investment and corporate financing.

    Some listed companies have been caught fabricating financial statements and other documents, but they were only fined a small amount and their stocks are still trading.

    Since August 2009, Chinese shares have maintained a clear downward trend, down from a peak of 3,478 points to around 2,000 points earlier this year.

    Although the equity market is showing signs of recovery, no one is sure that a bullish market is on the way as there are still many “black sheep” in the domestic market. Many are leaving the stock market and turning to safer investments.

    A lack of close supervision and severe punishment from securities regulators and judiciary organs is widely blamed. (SD-Agencies)