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B-share Rally Continues For Three Consecutive Days
China's stock markets surged for three consecutive days as Chinese investors rushed to buy B shares, which were once reserved only for foreigners.
Most B-shares hit their maximum 10 percent allowed increase for three days in a row when B-share trading resumed Wednesday after a six-day suspension to make preparation for the opening of B-share trading to domestic investors.
The B-share index on the Shanghai Stock Exchange, one of China' s two bourses, went up 27.20 points or 32.61 percent in three days to 110.4 points Friday, a high not seen since July 2, 1992.
On the Shenzhen Stock Exchange, the B shares rose 32.09 percent over the past three sessions to hit 168.70 points, a new peak since May 16, 1997.
In the days before the re-opening of the market, Chinese banks were swamped with customers transferring their foreign exchange into B-share trading accounts.
Latest figures show that investors opened some 320,000 new accounts in the first two days of the week, surpassing the total number of accounts opened in the past decade.
China introduced B-shares in the early 1990s and so far 114 companies issued B shares denominated in US dollars or Hong Kong dollars, compared with more than 1,100 A-shares priced in Chinese yuan.
B-shares have a combined market capitalization of about 7 billion dollars, which represents just over 1 percent of the value of the country's A-share market.
"The market capitalization for B shares is too small compared with the huge liquidity freed up from the bank deposits," a domestic analyst said.
Chinese residents currently hold about US$75 billion in foreign currency deposits.
Most analysts expect the rally to continue in the next week, which may reset the Shanghai B share Index at new highs.
"It is likely that all B-shares will continue to hit their maximum 10 percent permitted increase for two or three days next week," the analyst predicted.
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