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China may merge A-share, B-share markets
Updated: 2006-01-16 08:15

China's increasingly marginalized B-share markets, where share prices are denominated in U.S. dollars and which are available to overseas investors, are set to be merged into the country's A-share market, experts said. 

The B-share markets, originally designed for overseas investors but opened to domestic investors since 2001, have been increasingly marginalized as many overseas investors fled them after domestic investors entered the market.

The A-share markets on Shanghai and Shenzhen stock exchanges are open to domestic investors and qualified foreign institutional investors.

Share indices for the B-share markets dropped by about 70 percent during the past four years, according to the latest edition of the Economic Information Daily.

The B-share markets were originally designed as provisional ones before the country's A-share markets are to open to overseas investors.

Share prices have been on the rise over the past week as China made public regulations that allow overseas strategic investors to buy shares on the A-share markets.

The publication of the regulations triggered interest of investors for profit-taking in the undervalued B-share markets as share prices jumped by more than 10 percent over the past week.

Zhang Zhimin, an analyst with the China Securities Investment Consultancy Co., said there are no more justified reasons for the B-share markets to remain as overseas strategic investors are allowed to invest in the Chinese A-share markets.

Experts say the merger may take place after China completes its ongoing share reform later this year, which allows the State shares barred from public trading to be floated on the A-share markets.

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