SHENZHEN'S securities regulatory body is to be stripped of its power to allocate and approve B shares for listing from next year. The move follows Beijing's call to expand the B-share experiment beyond Shanghai and Shenzhen. Analysts said the immediate impact of the long-awaited expansion would be a more powerful China Securities Regulatory Commission (CSRC). A Shenzhen Securities and Exchange Commission official said the allocation and approval of B shares for listing on the Shenzhen stock exchange would be in the hands of the CSRC from next year. The Shenzhen commission said it would complete the 1994 share quota. Some of the B-share companies listed this year were part of last year's quota. B shares are traded in foreign currencies by foreign investors, while A shares are traded in yuan by domestic investors. Sources said Shanghai might be able to retain its B-share quota for local companies connected with the Pudong development zone, which had Beijing's blessings. 'If that is the case, I won't be surprised to see Shanghai-based companies making their registration in Pudong in order to gain share quotas,' the source said. One analyst said: 'The expansion of the B-share experiment to areas beyond Shanghai and Shenzhen could result in more consistency in the standard of listing prospects.' He said the centralisation of share allocation might not produce the expected result, due to a lack of unified rules on B shares. The much-delayed national rules on the issuing of B shares have raised concerns about the legal basis of allowing B shares to be issued anywhere in the country. The new rules, originally planned to take effect last year, were expected to supersede existing rules which state that only Shanghai and Shenzhen companies are allowed to issue B shares. Last year, the CSRC approved a quota of US$1 billion worth of B shares for this year - $100 million each for Shanghai and Shenzhen, with $800 million for companies outside the two cities. Nothing was heard about the $800 million worth of shares until further calls by new CSRC chief Zhou Daojiong in June this year. With no hard and fast rules, the two stock exchanges tended to favour their own companies when it came to dishing out their quota, leaving those from other cities in the cold. Analysts hoped the B-share market would be more liquid as foreign investors would have more to choose from as the number of companies issuing B shares rose.
