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Last updated at: (Beijing Time) Tuesday, February 26, 2002

Direct B-share Trading Open to Foreigners

Foreign securities brokerage firms have just won permission to directly trade hard-currency denominated B shares on the Chinese stock market, encouraging an injection of foreign funds.
However, experts claim any financial gain will not come in the short term.


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Trading Become Easier for Foreign Companies

Before entering the World Trade Organization (WTO), foreign brokerages were only able to trade B shares through local brokerages.

"It certainly makes trading easier for foreign brokerage companies," said Yan Bin, an analyst with Beijing Securities.

Sudden Inflows Hardly Comes

However, many experts say the move will hardly trigger any sudden inflows of funds from foreign brokerages in the near term, due to weak market sentiment, the small size of markets and undesirable performances of listed companies.

"If they didn't enter the market before (the permission of direct trading), they won't come now either," said Wang Yuanhong, a researcher with the State Information Center.

B-Share Market Opened Last Year

B shares have dropped by around 30 per cent from their peak in the middle of last year.

Many foreign brokerages fled the long-bearish market in the early part of last year, dumping their holdings to hungry domestic retail investors arriving in the foreign-only market.

China opened the B-share market to Chinese retail investors on February 19 last year, triggering three months of euphoria and doubling share prices.

The market is losing more liquidity as Chinese brokerages, banned by rules unveiled recently from proprietary B-share trading, will continue to trim their holdings.

"But the essential problems are the poor quality of listed companies and the small size of the market," Yan said.

Authorities Want an Active Market

Just over 110 companies have issued B shares, denominated in US dollar in the Shanghai bourse and Hong Kong dollar in Shenzhen.

Other researchers claim the B-share market still has a bright outlook for the year.

"The authorities still want an active B-share market," said Zheng Xiaohui, a researcher with the Research Center of Finance and Securities at Peking University.



Performance of B-share Firms Improves in 2000
China's 114 B-share companies had a slightly improved performance in 2000, according to information disclosed by their annual reports.

Except the 14 companies that were losing money, the foreign-currency denominated B-share firms reported 0.2093 yuan in per share earnings, up 2.35 percent from the level of 1999.

Click Here for More Info. of B-Share Market Including:
  • Notes on B Share Market Page
  • Listed Companies
  • Underwriter and International Coordinater
  • Annual Report
  • Interim Report


    • Sources from: China Securities Regulatory Commission


    Source: China Daily

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