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China's A and B shares fell yesterday as investors sold more shares after the benchmark Shanghai composite index sank below the psychological 1,500-point barrier, traders said.
Shanghai's composite ended 1.23 percent lower at 1,485.913 points and Shenzhen's sub-index dropped 1.30 percent to 424.56.
Shanghai's hard-currency B-share index dropped 3.34 percent to 124.235 points, while Shenzhen stocks fell 2.98 percent to 188.97.
Turnover on the B-share markets, available to foreign and some domestic investors, surged to US$21.08 million in Shanghai and HK$83.56 million (US$11.07 million) in Shenzhen.
"The market is oversold because investors are worried that the B-share market will gradually lose its importance in China's stock markets," said Shanghai Securities analyst Zheng Weigang.
China announced a scheme last week to allow qualified foreign institutional investors (QFII) into its massive A-share markets for the first time in December.
But there are worries the scheme might siphon foreign capital from B-share firms, which are mostly of poorer quality, traders said.
China has also allowed foreign investors to purchase non-tradable State-held shares.
Although such shares held by foreign firms cannot be listed now, some investors are worried about the eventual impact on the tradable shares they hold.
Chen Dinghua, an analyst at Everbright Securities, said: "The non-tradable shares will be transferred to foreign investors at a relatively lower price, which sparked worries among investors who bought the stock at a higher market price.
"Some investors who lost money in B-share markets also began to lose patience. They left the market by selling the shares they had held for a long period of time," he added.
Shenzhen-based Livzon Pharmaceutical Group Inc, a major medicine producer, was the biggest B-share decliner with a fall of 6.39 percent to HK$4.25 (56.3 US cents).
(China Daily November 13, 2002)
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