Shanghai B shares hit record lows on widespread selling

Mainlanders have joined foreign investors in dumping Shanghai B shares, pushing the index to a historic low before it recovered slightly by the market's close yesterday.

An hour after opening, the B-Share Index went downhill continuously and hit its lowest level of 44.3 points five minutes before the closing bell. It edged up marginally to end at 44.974 points, a loss of 3.82 per cent.

Turnover was US$6.89 million.

Shanghai B shares, traded in US dollars, were originally created for foreign investors, but loopholes in the laws have allowed mainlanders with access to dollars to buy the cheaper shares.

At yesterday's prices, Shanghai B shares were trading at an earnings multiple of 9.65 times, against 45.32 for A shares.

Analysts said that, taking its cue from the Hong Kong market, the index could test the 40-point barrier in the short term.

'The index could break through 40 points in the near term, and it will be a long while before it rises again,' Sun Hung Kai Investment Services analyst Norman Yu said.