Hi Ron,
Followup on an topic written about not so long ago.
Chaos of another kind ... chapter 2 ... liking the enthusiasm, soon to be followed by frenzy, human beings are so human. Do not have nearly enough of this toxic stuff, but enough for another Pt watch. The policemen with bamboo canes can not be too far away now:
biz.scmp.com
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B-share chaos feared
Authorities shut markets for an extra two days so system can settle down
CHRISTINE CHAN and ENOCH YIU
Beijing will keep its B-share markets closed for an extra two days next week, amid fears of chaos if it reopened on Monday as originally planned.
The markets were suspended last Monday afternoon before an announcement that locals with legitimate foreign currency accounts would be allowed to invest in B shares.
The move was expected to send the markets soaring when they opened again because B shares - quoted in US dollars in Shanghai and Hong Kong dollars in Shenzhen - trade at a heavy discount to the yuan-denominated A shares which are restricted to domestic investors.
Domestic investors have swamped the mainland's brokerages in the hope of opening accounts to trade in B shares. There is about US$75 billion held by these potential investors in bank accounts which are available for B-share trading.
The mainland has set Wednesday for the market opening.
A Shanghai Stock Exchange official yesterday cited technical reasons for the extra trading suspension in anticipation of a backlog of trading orders. Officials from the Shenzhen Stock Exchange could not be reached for comment.
Brokers said mainlanders' massive interest in B shares had meant brokerages and stock exchanges would face a tough time coping with the flood of orders within a limited time.
A broker with Great Wall Securities in Shenzhen said: "We have been very busy in the past few days dealing with inquiries from clients, setting up B-share trading accounts and depositing foreign currency into those accounts."
Under detailed rules announced by Beijing, domestic investors with a minimum fund requirement of US$1,000 will be allowed to trade the 114 counters on the B-share register. But their foreign exchange savings must have been deposited before February 19.
Over the past few days, banks have also been flooded with potential investors chasing evidence that they had foreign exchange on deposit before February 19.
The move to open the B-share market for mainlanders is seen as a key step towards an eventual merger of China's A and B share markets, driven by Beijing's bid to join the World Trade Organisation.
As part of the move, the Shanghai Stock Exchange yesterday told its members it would allow 15 minutes pre-market trading in B shares next week to find the best opening price for the shares.
Analysts said pre-market trading would help give investors a better indication of the direction prices would take in official trading. The Shenzhen Stock Exchange has had pre-market trading for many years.
Goldman Sachs economist Frederick Hu Zuliu said: "The suspension of trading is not an ideal arrangement, but it enables the necessary procedures and measures to be in place before the trading resumes next week."
Yesterday, China Securities Regulatory Commission chief adviser Anthony Neoh said he did not think mainland stock exchanges would relax their 10 per cent daily price limits.
"I think the two exchanges will use different type of measures to ensure the markets are trading in a stable and a fair manner. But I do not think they will change the suspension limit," he said.
Following the latest reform, Mr Neoh said B shares would also need to consider changes to the existing listing methods.
At present B shares are sold through private placements. Mr Neoh said open offer should be considered in future.
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