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Shanghai's B shares Exceed 200 Points, Shenzhen's Near 400
Chinese B-share markets didn't lose any steam and continued to gain ground despite the nation's regulator restricted trading of more chronically unprofitable companies.
According to Homeway, China's leading online financial and treasuries advisory company, Shanghai Forever Co., Ltd. (600818.SS, 900915.SS), Shanghai Steel Tube Co., Ltd. (600845.SS,900926.SS) and Hainan Overseas Chinese Investment Co., Ltd. (600759.SS) will be restricted to four hours of trading a week only on Friday under the punitive category called "Particular Transfer",the Shanghai Stock Exchange said in a statement.
The three additions bring to 15 the companies now on the list, facing possible expulsion from the market if they don't turn a profit this year. However, with the June 1 coming on, investors were making bets. Chinese regulator said any foreign currency accounts opened after February 19 can be allowed to trade B shares as from June 1 when it permits local investors' access to B shares for the first time in February.
Sentiment seemed high ahead of the US Fed's expected rate cut on Tuesday. Buying interest mounted up as investors hoped the US will reduce interest rates, which would probably forced the domestic central bank to loosen rate again on foreign currency deposits. That would further free up a lot of deposits, analysts predicted.
After a winning steak that lasted for three straight trading sessions, Shanghai's B-share Index, tracking US dollar-denominated B shares, succeeded in surpassing the 200-point level for the first time. The benchmark index shot up 3.42 points or 1.73 percent to 201.27 points, a new record.
In the meantime, Shenzhen's H.K.-denominated B-share Index added 4.05 points or 1.03 percent to finish at 398.52 points, the highest clsoing price ever. It fell a little off its session high at 399.96 points, just within a striking distance from the psychologically important 400 points.
In Shanghai, turnover of B shares rose to 282 million US dollars (2.34 billion yuan), which was about one-eighth more than Friday's total of 250 million U.S. dollars.
In Shenzhen, turnover was 1.67 billion HK dollars (1.77 billion yuan), some 18 percent more than Friday's total of 1.42 billion HK dollars.
Homeway analysts predicted that Both Shanghai and Shenzhen B-share markets are largely amid speculative sentiment as investors blindly push up prices.
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