| |
 |
Risks as B shares hit ceilings
|
Yang Yunfei
SHANGHAI B shares continued into record territory on Friday as investors ignored warnings of the risks of investing in the hard currency market and extended their buying spree.
The Shanghai B-Share Index surged 9.922 points, or 9.87 per cent, to close at 110.41, smashing an all-time high of 105.780 set on December 31, 1993.
Turnover was sharply higher at US$2.92 million, compared with Thursday's US$183,000.
The Shenzhen B-Share Index rose 9.73 per cent to end at 168.70 on turnover of HK$2.2 million, up from HK$242,000, setting Shenzhen, too, is on course to break records in the coming sessions. The record high for Shenzhen B shares is 201.87, a peak reached on December 10, 1996.
As B shares soared their 10 per cent daily limit for three straight days, there was speculation that the two exchanges would use existing rules to suspend trading today. But officials from both exchanges said on Friday that they were waiving the suspension, citing the surge was caused by a policy change for the whole market.
Stock exchange rules normally stipulate that trade in shares which hit their ceiling three days in a row be halted so that firms can issue a statement to explain the price move.
Turnover began to expand sharply for the first time in the market's history on Wednesday following an official announcement that local investors would be allowed into the market previously reserved for overseas investors.
Stocks on all the 114 counters listed in Shanghai and Shenzhen reached their daily limits within minutes of trade opening.
Analysts said that the higher turnover suggested that more sellers were starting to take profits after two days of thin trading.
“We expect more selling next week but hopefully there will be another two or three limit-up days before any profit-taking pressure emerges," said Wang Chunjiang at Guotai Jun'an Securities on Saturday.
Many B share investors have made gains of up to 30 per cent since trading resumed on Wednesday.
Lured by the impressive gains, hopeful investors continue to open trading accounts to get into the resurgent market which is expected to rise another 30 per cent or more this week.
A state television poll of new B share investors last week found 90 per cent of respondents did not mind “Dancing with the bankers (big traders who can rig share prices)", a play on the title of the popular US movie “Dances with Wolves".
But some analysts said that new investors should remain cool-headed in this round of frenzied stock trading and suggested a wait-and-see strategy this week instead of jumping into the market blindly.
Risks could mount in the short term as selling is expected to pick up this week, warned analyst Yang Jun at Shenyin Wangguo Securities.
“It's not a bad idea to offload some of your holdings as profit-taking pressure mounts," suggested Yang.
|
|
|
|
