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China B shares lose ground in regional turbulence

SHANGHAI: China's hard currency B shares closed lower on Monday as investors took heed of sell-offs on regional markets triggered by last week's falls on Wall Street.

The Shenzhen and Shanghai B share markets had shed as much as five percent by the early afternoon, pulled down by a plunge of more than eight percent in Hong Kong, but they recovered a bit before the close.

Brokers said China investors would watch on Tuesday to see whether Hong Kong shares stabilised.

The Shanghai B share index ended down 1.701 points or 3.97 percent at 41.176 on expanded turnover of $7.58 million.

The Shenzhen B share index slid 2.92 points, or 3.19 percent, to 88.70. Turnover soared some HK$15 million to HK$50. 52 million.

Setbacks on the B share markets paled in comparison to those elsewhere in Asia. Tokyo fell nearly seven percent, and Singapore more than nine percent.

Still, the chill was also felt on China's relatively insulated domestic A share markets, where punters had largely shrugged off the Nasdaq downturn last week. "There was no reason for B shares to stand still with no government policy aids in sight and nearby markets diving," said a broker at China Southern Securities.

China's B shares had been trading level for about two weeks after expectations of market-boosting measures fanned a brief rally in late March.

But some brokers said there was no sign the government would announce long-awaited policies, including proposals for Sino-foreign B share mutual funds, anytime soon.

Brokers said the Asian sprint away from high-tech counters was less dramatic in China, where the hard currency B indices have few technology shares.

But the domestic A share index, which tends to ignore performances of foreign markets, felt the heat because it has many technology-linked issues, they added.

"Some investors may now come to realise that the high-tech stocks are not a safe haven and the bubble can burst some day," said an analyst at a foreign securities. Index heavy weight Zhejiang Southeast Electric Power Co was the most active Shanghai B share issue, with a moderate 5.81 million shares changing hands. It fell $0.014 to $0.244, in line with the market setback, brokers said.

Southern Glass Co topped the active list of Shenzhen B shares, slipping HK$0.01 to HK$1.68 due to its net losses in 1999. Volume was 2.16 million shares.

More jittery punters in the A share market fled technology counters, which saw their losses worsening in the afternoon trade.

In Shanghai, Wuhan Danghai Co, a bioengineering counter, was among the biggest A share fallers, tumbling 2.62 yuan, or 8.87 percent, to 26.93 yuan on volume of 3.26 million shares.

Among Shenzhen A shares, Great Wall Computer Co fell 2.12 yuan, or 6.06 percent, to 32.85 yuan on volume of 1.99 million shares. -Reuters