China s B shares jumped for a third straight day today, narrowing the valuation gap with A shares and putting downward pressure on the renmimbi. Shanghai s B-shares closed at 110.4, up 9.87 percent, while Shenzhen s ended the day at 168.7, up 9.72 percent.
Analysts predict further B-share price rises next week.
There is a huge imbalance of demand and supply. Chinese investors have been piling into the B-share market ever since securities regulators opened the bourse to locals on Feb. 19, formerly a preserve of foreign investors only. Although volume has been relatively thin this week, there was heavier trading today than the two previous days. This was especially true of money-losing companies that are likely to be forced off the exchange by security regulators. Because B shares can only be purchased with foreign currency U.S. dollars in Shanghai and Hong Kong dollars in Shenzhen there has been a scramble for foreign exchange on the black market.