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Profit-taking sets in
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Yang Yunfei
SHENZHEN B shares bumped up against their daily limit for a fifth straight day yesterday, but the story was different on the Shanghai exchange, where B shares went on a roller-coaster ride as profit taking fever took hold.
Shenzhen B shares smashed their record high of 201.87 points set on December 10, 1996 after gaining 9.74 per cent to end at 203.17.
Turnover surged to a record high of HK$578.4 million, up from HK$112.1 million on Monday.
But Shanghai B shares rode a seesaw starting with a near 10 per cent surge then losing nearly all their gains on profit taking before surging again to end the day up 5.07 per cent at 127.477 as a surge of liquidity from a flood of new investors continued to pour in.
Volume skyrocketed to a staggering US$849.97 million, up from a four-month high of US$70.4 million on Monday.
Analysts said that the soaring volume suggested that many long-time players were taking advantage of the frenzy to trim their holdings and get out of the long-ignored markets, previously earmarked for overseas investors.
Daily turnover before the reforms had averaged a paltry US$20 million in Shanghai and HK$80 million in Shenzhen.
Analysts said that the expanded volume indicated a divided performance for B shares, rather than a uniform surge to the daily limit.
"Firms with strong fundamentals or rosy revenue outlooks will continue their surge, but those with poor result records, such as PT and ST stocks, will face pressure and are expected to see a major correction in the coming sessions," said Yang Jun at Shenyin Wanguo Securities.
In Chinese stock markets, counters are labelled special treatment (ST) if they spend two years in the red and particular transfer (PT) if facing three years of losses.
Yang predicted volatility in the next few days but the market would continue its bull run due to the strong liquidity and buying sentiment.
China's decision to let local investors into the moribund B share market has been greeted with wild enthusiasm by local investors who have flocked to securities houses to open trading accounts and snapped up any counter they could get their hands on.
By yesterday's close, Shanghai B shares have gained 53 per cent since the market reopened on Wednesday following a week-long suspension, while Shenzhen B shares have risen 59 per cent. The rally has pushed market capitalization up from only US$7.2 billion to US$11.1 billion.
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