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B shares defy convention
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Yang Yunfei
DESPITE gloomy headlines from the world's business press, China's high-flying B shares continued their bull run and closed up sharply yesterday, defying convention and the downward trend that has heavily battered overseas stock markets.
On a day that saw other Asian stock and currency markets tumble, liquidity from local investors and Hong Kong continued to pour into China's tiny, newly liberalized hard currency B-share markets in Shenzhen and Shanghai and sent them to record highs.
B shares rose across the board with the exception of two firms that were suspended from trading.
Shenzhen index leapt 9.72 per cent to close 31.89 points up at 360, just shy of an all-time high of 360.08 hit in late trading. Turnover surged to HK$4.703 billion from HK$4.59 billion on Wednesday.
The Shanghai B-Share Index rose 6.39 per cent to close up 9.03 points to a lifetime high of 150.48.
China's buoyant B share markets have bucked the global equity slide, which has heavily hammered millions of investors and slashed the wealth of many tech tycoons.
Downward spirals swept the United States and European stock markets on Wednesday, triggered by a smaller than expected interest-rate cut by the US Federal Reserve.
Analysts said that China's hard currency markets would be little affected by the recent plunges of the overseas markets as B shares are mainly traded by local investors.
“As there are not many foreign investors in the B share markets, the situations in the United States or Hong Kong have very limited bearing on the Chinese markets," said analyst Yang Jun at Shenyin Wanguo Securities.
Statistics show that some HK$10 billion from Hong Kong has been injected into B share trading accounts in Shenzhen since China opened its B share markets to local investors last month.
Shenzhen B shares have outperformed Shanghai by a wide margin, with the Shenzhen index soaring 182 per cent since the market deregulation. Shanghai B shares are 81 per cent higher.
State media said yesterday that some 600,000 new punters have piled into the nine-year-old, 114-counter hard currency markets. Before that, there were roughly 280,000 B share account holders.
The market relaxation announced on February 19 has unleashed a wave of fresh funds into the once moribund market, repeatedly pushing indices to record highs and turning it into the world's best performer so far this year.
The market is also expected to see another surge of liquidity in June when the restriction on foreign exchange deposits made before February 19 that are not allowed to buy B shares will be lifted on June 1.
The surge of liquidity has pushed the indices to record highs nearly every day since March.
As B shares continue their record-breaking performance, analysts warned against mounting risks in this speculative market.
“B shares are likely to undergo technical corrections over the next few days under heavy profit-taking pressure," said Tang Wanmin at United Securities.
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