| Reform talk lifts HK's China stocks |
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| Saturday,January 28,2006 Posted: 13:24 BJT(0524 GMT) 卡拉奇经商室 周宇翔 |
Speculation about further reforms to China's stock market helped drive Chinese shares listed in Hong Kong to their best level for more than eight years on Thursday.
The index of China Enterprise stocks, or H-shares, rose 1.2 per cent to 6,103.43, its highest level since September 1997.
H-shares rose 12.5 per cent last year, and have outperformed mainland Chinese stock indices for the past seven years.
Rumours abounded about a possible merger between China's A and B-share markets. A shares are quoted on domestic Chinese exchanges in renminbi and purchases by foreigners are restricted, while B shares are quoted in hard currencies.
Analysts said such a move would increase the number of Chinese shares available to foreign investors. But there was a feeling that many investors remained wary of the Chinese market and would find dealing in stocks listed in Hong Kong a preferable route.
There were also questions of relative valuations. Analysts say overseas-listed Chinese stocks were generally much cheaper than those listed on the mainland.
Reports in the Chinese press this week have suggested that companies might be permitted to buy back B shares or swap them for A shares, subject to shareholder approval. This would have the effect of increasing liquidity in the A-share market, which the government is believed to see as desirable. The Chinese authorities have not commented on the matter.
The B-share class was created in 1991 as a way for foreigners to invest in the market. But trading in B shares dwindled as other options for overseas investors became available.
The market capitalisation of Shanghai's B sharesstands at about Rmb100bn ($12.3bn), compared with the A share market cap of about Rmb2,700bn.
But talk of their possible removal has helped send the B-share indices in Shanghai and Shenzhen sharply higher in recent days amid speculation that investors would receive a premium for relinquishing their stock.
The Shanghai B index rose 9.3 per cent to a 14-month high on Thursday, extending the previous session's 9.1 per cent jump. That was the biggest two-day gain since March 2001.
Its counterpart in Shenzhen struck a nine-month high on Thursday.
The Shanghai composite index - which combinesA and B shares - rose 1.5 per cent to a 10-month high. But it declined 8.3 per cent in 2005.
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