Shanghai shares/close -- 2 (continued hopes of B-share surge from June 1)

Xiangcai Securities analyst Chen Wei said that although the B-shares 

underwent a period of consolidation in intra-day trade, the supply of 

liquidity to the market remained strong and many domestic individuals 

remained unwilling to sell their shares amid hopes of a surge in buying from 

June 1.

	    A report in the Shanghai Morning Post cited the People's Bank of China's 

Shanghai branch as saying that foreign currency deposits in Shanghai 

financial institutions at end-April amounted to 10.2 bln usd, down 139 mln 

usd from the end of last year.

	    "From this figure you can see that there was a strong flow into the 

B-share market. It is also expected that the U.S. Federal Reserve will cut 

interest rates further at its meeting on June 26, which may in turn trigger 

cut in domestic interest rates on foreign currency deposits and cause even 

more money to flow to the B-share market," he said.

	    Chen added that he expects B-shares to see strong gains from June 1, 

although the surge in buying may only really begin one or two days after this 

date.

	    Although there are some concerns that investors who buy B-shares after 

June may find themselves trapped as prices correct, Chen said the B-shares 

gains over recent months have been due to the implementation of policies 

aimed at stimulating the market, and the market's strong performance is 

likely to be sustained amid continued policy support.

	    He also said he believes it possible that foreign buying may recover from 

next month.

	    "Foreign investors largely trimmed their positions after the index rose 

to about 145 points, where they believed it was unsafe. With a clearer 

understanding now of the situation of China's stock markets, they may be 

looking for opportunities to get back into the market," he said.

	    Among companies whose B-share prices are already higher than their 

A-share prices, Jinan Qingqi's A-shares closed down 0.13 yuan at 6.63 on 3.4 

mln shares, while its B-shares closed up 0.004 usd at 0.889 on 16.8 mln 

shares.

	    Hainan Airlines' A-shares rose 0.01 yuan to 8.96 on 1.6 mln shares, while 

its B-shares shed 0.003 usd to 1.109 on 7.6 mln shares.

	    Among other A-shares, Shanghai Raw Water shed 0.16 yuan to 8.94 on 6.1 

mln shares.

	    Baoshan Iron & Steel dropped 0.02 yuan to 5.41 on 8.2 mln shares, while 

Baotou Steel Union rose 0.04 yuan to 7.1 on 4.3 mln shares and Handan Iron & 

Steel shed 0.07 yuan to 8.05 on 4.7 mln shares.

	    China Minsheng Banking declined 0.2 yuan to 19.91 on 4.3 mln shares.

	    Among other B-shares, Zhejiang Southeast Electric Power rose 0.021 usd to 

1.062 on 31.4 mln shares, while Heilongjiang Electric Power gained 0.012 usd 

at 1.024 on 14.2 mln shares.

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