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New Bullish Run Expected for China's B Share Market
A new bullish run is widely expected for China's foreign-currency denominated B share market, as new regulations fully open the market to domestic investors on Friday.
China's B share market formerly reserved for overseas investors has been in a sleepy state for years, partly because of the small size of the market, which has failed to attract overseas institutional investors as the regulators had hoped.
The market was formally opened to domestic investors with foreign currency deposits in domestic banks in February, attracting tens of thousands of new investors to the market and resulting in the soaring of nearly all the B share stocks.
However, Chinese citizens without foreign-currency deposits in banks by January 29 have had to wait until Friday.
Analysts said the massive rally over the last three months has greatly enhanced investors' confidence. They expect that the coming rush will far exceed the last rush in both the number of investors and funds available.
The changes in foreign currency deposits in banks seem to agree with this theory.
The Shanghai branch of the Industrial and Commercial Bank of China said they have recorded a remarkable increase in inquiries concerning B share investment matters.
The bank's daily private foreign currency trading also rose by about 50 percent to over three million yuan.
Figures provided by the Shanghai branch of the Bank of China show that its foreign currency deposits decreased by 130 million US dollars between February 19 and May 30.
Meanwhile, as a large number of private accounts are transferred to accounts of securities dealers, the bank's foreign currency deposits owned by financial institutions gained 490 million U.S. dollars.
Bank sources said China's private foreign-currency deposits have hit 75 billion U.S. dollars, while the total capitalization of the B share market is only 17.5 billion dollars currently, indicating a rich supply of funds could enter the market.
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