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Weekly Review: B Shares Plow ahead, Buoyed by Techs ST, PT
Chinese hard-currency B shares headed into new records again this week. The benchmark index stood firm above 200 points in Shanghai and the major average exceeded 400 points for the first time in Shenzhen.
According to Homeway, China's leading online financial and treasuries advisory company, the June 1 was the engine behind the market throughout the week.
Chinese regulator said all foreign currency accounts can be allowed to trade B shares that day. People are now convinced they' ve seen the bright prospect and are more afraid of missing it than of potential downside risks.
Many analysts and traders expect the central bank will reduce interest rates for foreign currency deposits after U.S. Federal Reserve's Open Market Committee Tuesday slashed U.S. interest rates by another half-point.
As of the end of April, China's banks have 74.55 billion U.S. dollars of foreign currency deposits by individuals. The Shanghai B-share Index, tracking U.S. dollar-denominated B shares, advanced 11.07 points or 5.60 percent in the past five days to end at a record of 208.92 points.
Shenzhen's H.K. dollar-denominated B-share Index also built on powerful gains, albeit at a less vigorous pace than its Shanghai counterpart. The major average in Shenzhen gained 9.53 points or 2. 42 percent for the week to close at 404.00 points, also the highest mark ever seen. Volume was healthy.
Turnover was 1.60 billion U.S. dollars in Shanghai this week, and in 8.94 billion HK dollars Shenzhen in the week.
Glancing at sector activity, all tech groups ended modestly higher after China United Telecommunications Co., the nation's No. 2 phone operator, signed contracts worth 12.1 billion yuan (1.45 billion U.S. dollars) on Tuesday with companies which won bids to build its new mobile phone network, the code division multi access project.
Homeway anyalysts predicted that people are now decisively in the bear camp for the B-share markets. Views are largely biased towards the expectation that June 1 will be successful in jump- starting the markets.
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