Chinese shares fall 1.6 percent as investors dump foreign currency “B shares”

By The Associated Press

Investors looking for reassurance after last week’s jolt to global markets didn’t find it in China on Monday.

China’s benchmark Shanghai Composite Index fell 1.6 percent on Monday as traders sold off holdings in foreign-currency denominated “B shares” after officials denied rumors those stocks might be merged with the mainstream Chinese-currency “A shares.”

The main Shanghai Composite Index closed at 2,783.31. The smaller Shenzhen Composite Index fell 0.7 percent to 725.82.

The decline came as markets in Asia and Europe extended their slide into a second week amid worries over a possible global slowdown.

In China, a lack of market-boosting news as the national legislature began its annual session also appeared to sap buying enthusiasm.

Investors began selling B-shares, which are traded separately from yuan-denominated “A shares,” after Zhu Congjiu, president of the Shanghai Stock Exchange, told reporters there were no plans to merge the two markets. Zhu’s remarks were widely reported in the state media.

The Shanghai market’s B-share index plunged 6.9 percent to 161.44. Shenzhen’s B-share index fell 6.4 percent to 461.58

Speculation that the markets might be merged had pushed B-share prices higher in recent weeks since investors believed such shares might be exchanged at a premium for A shares.

Even after Monday’s tumble, Shanghai’s B-share index was still 24 percent above where it began the year. The A-share index was up 4.11 percent for the year, despite a nearly 9 percent plunge on Feb. 27 that rattled global markets.