| |
 |
Sale day for Bs nears
|
Yang Yunfei
CHINA'S recent move to open up the B share market to domestic investors has opened the door to up to US$75 billion in bank deposits for investment and unleashed a flood of liquidity into the formerly moribund nine-year-old market.
Eyeing the huge price differences between the domestic A shares and the hard currency B shares, hundreds of thousands of new investors have poured into the market to cash in on China's latest stock market reforms.
B shares shot up their ten per cent daily limit three days in a row since the market reopened on Wednesday following a week-long suspension. New investors waited in vain for sellers who firmly held on to their shares.
As the huge imbalance of demand and supply is expected to continue this week, we invited some investors and analysts to offer their opinions on the market.
Zhao Wei, investor
I am a new player and opened a trading account just a few days ago. You know, the one-year US dollar deposit rate has been lowered from 5.5 per cent to 3.8125 per cent since last December and the interest rate is so low that it's mpt worthwhile to leave money sitting in the bank.
There is a large discrepancy in the value of A and B shares and I believe this upward trend in B shares will continue until the sharp price gap is narrowed down.
But I will certainly be very cautious in buying B shares in the near future as the market is tiny and speculative.
Hu Langui, analyst
The resurgent B share market has inflated many investors' expectations of hefty returns. Many investors even expect their shares to surge 50 per cent before they unload their holdings.
B shares are cheaper and have better development prospects, as they are widely expected to be merged into the more liquid A share market.
But that will take three to five years or even much longer as China's local currency is not fully convertible on the capital account.
After three days of huge demand and scarce supply, I predict selling pressure will emerge this week, probably on Wednesday or thereabouts.
Pei Jiwei, analyst
The B share market has always been tiny, and at the moment demand far exceeds the supply. The result is a surge in share prices in a very short period.
Turnover on Friday began to expand for the first time since trading resumed on Wednesday. This suggested that more sellers were creeping into the market.
More selling is expected to pick up today or tomorrow and profit-taking pressure will emerge. But all these will not change the upward trend in the B share market in the long term.
Zhang Shaobo, investor
I have waited several years for the market to wake up. Of course, the higher it goes, the better.
I expect another three or four limit-up days before prices climb high enough to tempt existing shareholders to offload some of their holdings.
Lin Shishun, analyst
Since the announcement of opening up the market, more than 340,000 local investors have opened B share trading accounts, nearly doubling the previous total of 280,000 accounts. This means, theoretically, the influx of domestic liquidity can push B shares up 100 per cent, or even much higher.
If you already hold B shares, you are very lucky. For those who intend to dabble in B shares, I suggest they focus on firms with good fundamentals.
|
|
|
|
