China has bowed to reality by allowing local investors to invest legally in the B-share markets, originally designed for foreigners.
At the same time, it has taken a major step that is probably a prelude to a long anticipated merger of the A and B-share markets.
For years, Beijing looked the other way while domestic investors had become the main force behind the trading of foreign currency B shares listed on the Shanghai and Shenzhen exchanges.
Poor transparency, inept corporate management and mediocre results at listed B-share companies have chased foreigners away from the markets, leaving Chinese regulators with no alternative to some form of acceptance of a role for local investors.
But in a brief statement on national television yesterday, Beijing confirmed that it was finally clearing away the main legal obstacles to B-share purchases by local investors.
It added the move was being made because of the improvements in the nation's foreign exchange position.
