Chinese regulators are trying to support sagging share prices on the country's two domestic exchanges -- by restricting access to them. The move risks marginalizing China's stock markets even more, as a slew of Chinese companies head overseas to raise capital, say securities analysts.

With the benchmark Shanghai Composite Index near eight-year lows, the China Securities Regulatory Commission, the market watchdog, has quietly imposed a fresh moratorium on new share issues that will likely last through 2005, say senior exchange officials in Shanghai and Shenzhen. The move follows an earlier freeze on such issues in the second half of 2004.

The latest freeze coincides with a reform program begun in April to unload billions of dollars of existing but currently untradable state-held equity in the Chinese stock markets.

The worry is that the domestic markets can't absorb so many shares; the exchange officials say it is better first to fix the bigger problem of finding buyers for the state-owned stock, which has a total value of about $250 billion. These state shares, which are not considered new issues, are not covered by the moratorium. "We have to let the current reform play out," one Shanghai exchange official said. "There's no timetable" for resuming new stock issues, he added.

The moratorium reverses a government push to list China's brighter corporate stars at home and deals a setback to the two domestic stock exchanges, which have been seeking a bigger slice of global stock offers.

In recent months, though, several big Chinese companies have set aside plans to issue Class A shares, equities denominated in local currency that trade on domestic exchanges. Bank of Communications, the country's first state-run bank to be listed overseas, and China Shenhua Energy, a top coal producer, both backed away from coupling Shanghai listings with global stock offers because of market conditions, said executives involved in the offers.

In June, Shenhua raised about $2.95 billion in Hong Kong, the world's second-largest stock offer this year. Bank of Communications followed with the next-largest, earning $1.89 billion, also in Hong Kong. Yet an executive at Shenhua with responsibility for its share listings said China's stock moratorium derailed a big domestic offer that was to accompany the Hong Kong offer.

Another issue highly anticipated by Chinese investors, PetroChina, says it now has "no specific plans" for a domestic listing, although "it continues to study" the matter, said Beijing-based spokesman Cao Zhengyan.

PetroChina's Hong Kong-listed shares touched a record Tuesday amid rising global oil prices.

In the past decade, Hong Kong has been the main destination for the country's biggest state-owned companies in search of capital. Several also have headed to New York and London. The Shanghai and Shenzhen exchanges have sought to grab a bigger piece of the fund-raising pie, in part to revive confidence among Chinese investors and stir interest among foreign institutions that are being allowed to buy limited amounts of domestic equity.

Bans on new share listings have hampered those efforts. The China Securities Regulatory Commission imposed a four-month moratorium on share issues last August, after the launch of a new system to price stock offers.

The ban was lifted in January, only to be reimposed after the government began its state share program in April. The result: While about 100 companies listed their shares in Shanghai and Shenzhen before the first moratorium, only 15 have done so in 2005 -- and none since mid-May.

The Shanghai Composite Index has fallen 18 percent since the start of the year.

With capital markets clogged up, Chinese companies have been turning to banks to fund their growth -- and to absorb their mistakes. In the first quarter of 2005, China's banks accounted for 99 percent of the capital raised by companies domestically, according to the People's Bank of China, the central bank.

That was up from 97 percent for all of 2004.