B-share jump draws attention

China's B-share market has long been the poor relation of its A-share market. But perhaps not for much longer. Looser regulations on foreign exchange are pumping new life into these foreign-currency shares, with many investors rushing out and opening new accounts to trade in the B-share markets.

B share markets in both Shanghai and Shenzhen kept climbing in November.

Only one of the 13 working days witnessed a drop.

Shanghai B shares have jumped about a third, while Shenzhen's have grown by a fifth. An industry insider explains.

Huang Xiangbin, Chief Strategic Analyst of Cinda Securities, said, "The price gap between A and B shares is the potential motivation for buying B shares. Secondly, the country has loosened foreign exchanges recently, and more people expect RMB appreciation, so foreign liquidity is abundant in China now."

Exclusiveness in foreign exchange makes the B share market less active than for A shares. And transaction volume has been in a downturn, deepening the price gap.

Zhang Gang, Strategic Analyst of Southwest Securities, said, "The only difference between B shares and A shares is trading currencies, so B share prices are undervalued. It's been a long time, so this tide of growth will not fully eliminate the margin."

China's B share markets were established in 1992 with the purpose to attract foreign capital. So at the very beginning, only foreign investors could buy B shares.