The foreign currency denominated B-share market surged yesterday as investors took a cue from remarks made by the chief researcher of the securities watchdog and bet that Beijing would roll out measures to reform the sluggish market.
The US dollar denominated Shanghai B-share Index climbed 19.01 points, or 5.72 per cent, to 351.416, its biggest single-day gain in two months. The Hong Kong dollar-denominated Shenzhen B-share Index jumped most since August 20, closing at 768.488, up 29.67 points, or 4.02 per cent.
Among the 104 B-shares companies traded yesterday on the Shanghai and Shenzhen stock exchanges, 103 stocks rose while only one stayed unchanged from a day earlier. None fell in value.
Qi Bin, head of the research department at the China Securities Regulatory Commission, apparently triggered the rally when he told a financial forum on Thursday that the watchdog 'is carefully studying the B-share market.'
Mr Qi's remarks sparked speculation that the slumbering B shares would be merged with the yuan-denominated A-share market, a move that is expected to benefit existing shareholders. B shares trade at a discount to their A-share counterparts.
'It was incredible,' said Haitong Securities analyst Zhang Qi. 'A single comment could have driven up the market that much.'
The mainland created the B-share market in 1992 to help companies tap overseas funds. However, the market has been sluggish as it lacks liquidity and solid companies.