tailieunhanh - Encyclopedia of Finance Part 9

Chapter 15 CHINESE A AND B SHARES. Abstract A and B shares exist in the Chinese stock markets. A shareholders are domestic investors and B shareholders are foreign investors. During the early-and mid-1990s, B shares were traded at a discount relative to A shares, and B-share returns were higher than A-share returns. | Chapter 15 CHINESE A AND B SHARES YAN HE Indiana University Southeast USA Abstract A and B shares exist in the Chinese stock markets. A shareholders are domestic investors and B shareholders are foreign investors. During the early-and mid-1990s B shares were traded at a discount relative to A shares and B-share returns were higher than A-share returns. It is found that B-share market has persistent higher bid-ask spreads than the A-share market and traders in the B-share market bear higher informed trading and other transaction costs. In addition the higher volatility of B-share returns can be attributed to the higher market making costs in the B-share market. Keywords Chinese A shares Chinese B shares stock return volatility asymmetric information bid-ask spread transaction costs stock ownership Shanghai stock exchange Shenzhen stock exchange The development of equity markets in China started in early 1990s. Open for business in December 1990 the Shanghai Stock Exchange SHSE and the Shenzhen Stock Exchange SZSE are the two major securities exchanges in China. By 1998 the SHSE had raised a total of billion for listed companies and the SZSE had raised a total of RMB 128 billion for listed companies. The two exchanges played an important role in promoting the restructuring of state-owned enterprises. Stock shares in China are divided into two broad categories untradable and tradable. By the end of 1998 the total untradable equity of the listed companies was billion shares . percent of the total equity of the listed companies allocated as follows 1 shares owned by government billion 2 shares owned by legal persons billion 3 shares owned by employees and others billion. Outstanding tradable shares totaled billion shares . percent of the total equity of the listed companies allocated as follows 1 Class A shares billion 2 Class B shares billion and 3 Class H shares billion. Class A .