B shares traded on both the Shanghai and Shenzhen stock exchanges surged yesterday on speculation they will be merged with A shares.

The B-Share Stock Price Index yesterday rose 7.19 percent to 152.676 in Shanghai and climbed 3.91 percent to 479.74 in Shenzhen. Meanwhile, A shares in Shanghai dropped 1.96 percent to 2770.11.

Since the China Securities Regulatory Commission (CSRC) finished its work making non-tradable shares tradable last year, the reform of B shares has become a hot topic.

It is widely considered that B shares will be able to catch A shares in price after the reform. The price of B shares is usually lower than A shares.

"B shares will either be totally bought back by companies themselves or directly converted into A shares, though until now, no clear official policies have been given concerning the fate of the B share," Cheng Weiqing, an analyst from CITIC Securities, told China Daily.

The long-awaited B-share reform has generated investor interest in B shares. "Investors from home and abroad both hope to make money," said Cheng.

The price rise came on speculation China may start B-share reforms soon after this Spring Festival holiday, as reported by China Economic Times on Wednesday, citing an anonymous source close to the CSRC.

According to the source, the CSRC's marketing department has already finished its draft B-share reform plan. The final scheme will be decided at a CSRC meeting held after January 20.

But this was dismissed a day later by the securities regulator as "not true".

Speculation drives price

Cheng said speculation often affected share prices, recalling two pieces of speculative news about the future of B shares last year that caused the shares to fluctuate.

1

2

(For more biz stories, please visit Industry Updates)