SHANGHAI (Reuters) - Shanghai will start to oversee companies listed on its stock exchange based on industry breakdown rather than on regions from this year, to improve supervision over information disclosure.
Chinese regulators are struggling to conduct reforms to reverse the country's investment culture of heavy speculation in volatile small-cap firms, encouraging investors instead to trade more in blue chip companies, among other reforms.
The Shanghai Stock Exchange has selected 11 major sectors, including property, manufacturing, medical services and finance, as top targets of its supervision in the new system to ensure the health of major listed firms, it said in a statement published in its website www.sse.com.cn late on Sunday.
The previous system was put in place in the early 1990s when China established its equity markets. That system had the disadvantage of neglecting key listed companies by treating information disclosure with the same standards across regions.
"Supervision via industries is a major reform of the Shanghai Stock Exchange's supervisory mechanisms. The exchange will thus strengthen the effectiveness of corporate information disclosure so as to promote the healthy development of the market," it said in the statement.