Shanghai A-shares close flat; B-shares higher
SHANGHAI (AFX-ASIA) - A-share prices closed flat in rangebound trade slightly above the key psychological support level of 2,200 points on the composite index, dealers said. Sentiment remained firm amid the belief that the government is keen to prevent share prices dropping significantly below current levels, although liquidity was under some pressure following a recent acceleration in the pace of initial public offerings, they said. B-share prices closed higher, rebounding from yesterday's declines, while domestic investor sentiment remained strong amid hopes of a surge in buying from June 1, when domestic individuals gain the right to use foreign currency deposited after February 19 to invest in B-shares. Nonetheless, analysts said B-share upside potential appears limited, as many B-shares are already trading close to their A-share prices and both Jinan Qingqi Motorcycle and Hainan Airlines are already trading above their A-share prices. The A-share index declined 0.52 points or 0.02 pct to 2,287.03 on turnover of 13.08 bln yuan after trading between 2,292.24 and 2,282.13. The B-share index closed 4.55 points or 2.07 pct higher at 224.08 after trading between 224.95 and 218.06. The composite A- and B-share index closed 0.71 points or 0.03 pct higher at 2,198.30 on turnover of 15.91 bln yuan after trading to a high of 2,202.84 and a low of 2,192.17. The SSE-30 index dropped 9.7 points to 3,970.82. Guotai Junan Securities analyst Zhang Jun said A-share investor sentiment appeared firm as the composite index rose above 2,200 points in intraday trade, while there was little negative market news. "Although the indices are still high, investors feel there is no risk of a sudden drop, because a correction would not fit in with the central government's policy. "The government has a lot of things it wants to do, such as launching some large IPOs and selling off state shares," he said. Nonetheless, Zhang said he sees little prospect for strong A-share gains unless there is stronger buying of major large-caps, adding that the current key gainers are recent listings and companies expected to undergo asset restructuring. He said price-to-earnings ratios on the A- and B-share markets are now very close to each other, and although this points to heightened B-share market risk, "investors don't really care about this". B-share sentiment remained strong amid expectations of a surge in buying from June 1, and hopes that yesterday's cut in interest rates on domestic U.S. dollar deposits will force more funds into the B-share market. However, since B-share prices are already very high, there seems little real chance of a surge in buying at this stage, he said. He also noted that Jinan Qingqi Motorcycle's B-shares are already trading above the company's A-share price. Since Jinan Qingqi is not a particularly good quality company, there seems to be little reason for its high B-share price, he said, adding that he believes the high price may have been generated by institutional cross-trading. Jinan Qingqi's A-shares closed down 0.08 yuan at 6.76 on volume of 4 mln shares, while its B-shares were down 0.001 usd at 0.885 on 18.5 mln shares. Hainan Airlines' A-shares closed up 0.14 yuan at 8.95 on 2.6 mln shares, while its B-shares closed up 0.093 usd at 1.112 on 8.3 mln shares.
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