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Christine Chan

THE Shanghai B index will have grown by 20 per cent at year-end from existing levels, according to DBS Securities Hong Kong.

  The forecast, made by DBS Singapore's wholly owned subsidiary, is based on the 75.12-point peak reached in the recent rally of the Shanghai B index.

  The index was now off its peak by about 10 per cent. It was 68.71 points at yesterday's close.

  Senior analyst for China, Maurien Yau, yesterday said Shanghai B stocks had a higher investment value than Shenzhen shares, or even H shares in Hong Kong.

  ''Most Shanghai companies posted good results last year. Information disclosure has also improved.

  ''We expect the Shanghai B index to reach 90 points this year and 110 points next year,'' she said.

  A report released yesterday by the brokerage says the Shanghai market is better established in terms of its regulatory framework.

  ''The securities people in Shanghai have been doing well in establishing the necessary frameworks for the market,'' Ms Yau said.

  Shenzhen had attracted less attention because of its lack of liquidity and the nature of its listed companies, Ms Yau said.

    Shenzhen B companies are also reckoned to be more speculative in view of their small size, short histories and high exposure to real estate, the DBS report said.

  Although H share companies offered lower risk, they also offered limited returns because of their large workforces and low degree of management autonomy, it said.

  The brokerage's anticipation of a rebound in the Shanghai B index at year-end would be helped by a continued improvement in the regulatory framework of China's securities sector.

        Foreign investors in China's stock market, restricted to the trading of B shares, were also concerned about the government's ability to keep the country's economy under control.



DBS predicting high growth for Shanghai B index