CHINA’S B-share market, a long neglected corner of China’s stock market, is enjoying a massive revival as a rally in Hong Kong spills over into the foreign-currency denominated B shares trading in Shanghai and Shenzhen.

    The Shanghai’s U.S. dollar-denominated B-share index rose 9.06 percent Friday to 346.87, a seven-year high and its largest one-day rally since 2009, with every single component of the index rising by 10 percent, the maximum daily limit.

    The Hong Kong dollar-denominated B shares in Shenzhen surged 6.72 percent.

    Analysts said that the surge fanned by expectations that companies could convert B shares into A shares, prompting bargain hunting.

    Wu Kan, head of equities trading at Shanghai-based investment firm Shanshan Finance, said investors were starting to realize the B shares, like Hong Kong stocks, were also much cheaper than A shares.

    The B-share market has been a policy dead-end for years, and was widely considered an illiquid speculative swamp. It was originally created to allow mainland companies to list shares in U.S. dollars and Hong Kong dollars, which foreigners could then trade, but the market became moot when regulators began allowing mainland companies to list on overseas exchanges.

    Since then, regulators have struggled to wind down the market without success, but have allowed some companies with dual listings to convert their B share issuances into H shares.

    (SD-Agencies)