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Monday, 19 February, 2001, 14:53 GMT
China reforms stock market
Chinese trader
Liquidity in share trading will be boosted
China has opened its share dealing doors to local investors, completing the liberalisation of its stock markets.

The decision was approved by the State Council, and announced by the China Securities Regulatory Commission.

Domestic investors with legal foreign exchange accounts will be allowed to trade hard currency 'B' shares - which have previously been reserved for foreigners - for the first time.

Analysts say the decision will give a huge boost to the volume of shares traded on Chinese stock markets, and prices surged ahead of the announcement.

Rising prices

Trade in all 'B' shares was suspended in the afternoon, fuelling rumours of the pending announcement.

In morning trade, B-shares had surged by 3.6% in highly-active trade.

"B-shares saw a buying spree with gains across the board, and turnover expanded largely this morning," said a dealer at UBS Warburg.

Local investors have previously been restricted to trading 'A' shares, but are thought to have found loopholes to enter the B market as well.

It is now expected that prices on the A and B markets will converge.

Chinese brokerages will also fare much better as a result of the news.

Crack down

The Chinese government last week appointed Hong Kong's Laura Cha to be vice chairman of the China Securities Regulatory Commission.

It is the first time that Beijing has filled a high government position with someone from outside the mainland.

Her appointment comes as Chinese regulators increase efforts to crack down on stock price manipulation and market abuse.

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See also:

15 Feb 01 | Business
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China's WTO goal in sight
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