A Shares Gain Further Ground in SentimentDomestic A shares gained further ground Tuesday, February 27, on expectations that hard-currency B shares will surge when they resume trading Wednesday.Companies with both A and B shares listed took the lead in the afternoon session and that helped prop up sentiment, analysts said. The Shanghai composite index rose 7.349 points to close at 1,962.042. Turnover eased to 6.88 billion yuan (US$828.9 million), as compared to that of 7.16 billion yuan (US$863 million) on Monday. "Surges in A shares of companies that also have B shares helped improve market sentiment in late trade," said an analyst of Beijing Securities yesterday. "Investors are betting B shares will jump to their 10 per cent limit across the board," she said Tuesday. Trade in hard-currency B shares, originally reserved for foreign investors, was suspended last Monday when regulators announced domestic investors would also be allowed to trade B shares. But the two exchanges were still making technical preparation for the reform and a flood-in of capital in the first two sessions of this week. Trade in B shares is expected to resume today. Investors, however, have flocked to banks and trading branches of brokerages to set up B-share accounts or transfer between accounts on rosy expectations of the hard-currency market. Reports said thousands of Chinese have opened B accounts since Beijing announced the market opening last week. Chinese residents now hold US$75 billion of foreign currency deposits at domestic banks. Analysts said greater liquidity in the B-share market could also attract the interest of foreigners, who have shunned the market because of a shortage of quality firms and its small size. B shares are still traded at a sharp price discount to A shares. Investors hope they can rack up profits in the counter. But some analysts said people are still cautiously watching the trend. In the A share market, loss-making firms continued to fall. Shenzhen's composite sub-index edged down 3.10 points to 4,462.05 yesterday despite the rise of A-share companies with B shares before the close. The composite indices have fallen sharply last week as investors sold stocks of loss-making firms. Investors are still sidelining in the dearth of new market leads. High-tech stocks remained a down trend as worries about a crackdown on irregularities and price manipulation lingered. Analysts expected a strong B-share rally would also drive up A shares in the coming sessions. The Dow Jones China 88 Index rose 0.17 point, or 0.1 per cent, to close at 169.23 yesterday. The Dow Jones Shanghai Index gained 0.84 point to end at 236.76 and the Dow Jones Shenzhen Index increased 0.90 point to finish at 236.74 yesterday. Source: China Daily |
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