We knew that shares in People’s Daily Online (SHA:603000), China’s government-backed news website, were hot, but apparently they’re a little too hot to handle. The stocks were suspended in morning trading on the Shanghai Stock Exchange today after excessive trading had pushed its price up by just over 100 percent from its initial listing at 20 RMB per share last Friday. It is currently at 40.5 RMB, and has now resumed action in the afternoon.
The procedural measure is, says an article on the People’s Daily site, “aimed at reining in speculative manipulation of share prices,” and is temporary. Indeed, the shares were also briefly halted on their debut last week.
But the motives for the bullishness on these stocks is interesting. Li Weidong, research director at consultancy China Venture, told the People’s Daily Online:
The reason why investors are bullish about the news portal is because of its unique background. In some investors’ eyes, the state-backed media company’s profits are somehow guaranteed given the support it receives from the government’s preferential policies.
And so its state-sponsored heritage makes the stock, perhaps, a sure-fire winner in the micro-censored media landscape in China where private news websites can be ordered to do anything, and authorities can even demand the removal of articles or key personnel. That makes life tough for web portals like Sina, (NASDAQ:SINA), Sohu (NASDAQ:SOHU), et al.
Other government-controlled news organisations might list in China soon, including state broadcaster China Central Television (CCTV), and the official news agency Xinhua.