While the country witnesses B-share mania, an increasing number of B-share issuing companies are also turning to the A-share market for more financing opportunities.
Analysts believe that encouraging B-share issuers to issue A shares is a more market-orientated way of merging the A- and B-share market. The process will help narrow the price gap between A and B shares by market adjustments instead of administrative orders.
"This is especially so if we take into consideration the Chinese authorities' attitude towards merging the two markets," said Wu Minglong, an analyst with www.eefoo.com, a leading securities website in China. China's authorities do not expect the markets will merge in less than 10 years.
China Securities Regulatory Commission Chairman Zhou Xiaochuan and Anthony Neoh, chief adviser of the commission, said the merging of A- and B-share markets was not likely to happen in the very near future.
Wu made the remark after yesterday's roadshow in Shanghai, held by the Shanghai Matsuoka Company Limited, a Sino-foreign company specializing in clothing and special printing.
The company, which issued more than 300 million B shares in 1999, will launch 100 million A shares on the Shanghai Stock Exchange tomorrow.
It is the first B-share issuer in China to issue A shares after the opening up of B shares for domestic investors last week.
Not long before the opening up, several B-share issuers also issued A shares, including the Zhenghua Port Machinery Co.,Ltd and the Changyu Wine Production Co Ltd.
Wu said the trading amount and liquidity of B shares was still not comparable to those in the A-share market, despite last week's opening up.
If B-share issuers can increase or issue new A shares, they can gain better access to capital and strengthen their financial power, Wu said.
"As a result, investors' confidence can push up B-share prices to be closer to their A share prices and help achieve a natural merging."
(China Daily 03/08/2001)
