Wed, 14 Mar 2001, 10:52pm EST

China Shares Crash Would Create `Major Problem,' Official Says By Eugene Tang

Shanghai, March 15 (Bloomberg) -- A crash in China's bubble markets would create ``a major problem'' for the nation's 50 million stock investors, a Shanghai stock market executive said.

``The market may crash at any time,'' Liu Xiaodong, Shanghai Stock Exchange executive vice president, told participants at the Economist Group's CFO Asia conference in Shanghai. ``That's the way of life. But it will be a major problem for us because we do not have hedging mechanisms in place.''

Shanghai plans to introduce futures and options on its exchange, he said, ``so investors can still make money or protect against losses if the market goes down.''

His comments come as Shanghai's foreign currency B shares index rose a second day to a nine-year high. The Shenzhen B share index surged 3.2 percent in recent trading to a record. China's B shares have more than doubled since Feb. 19, when the government eased rules on locals buying shares denominated in Hong Kong and U.S. dollars.

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Securities%20Firms%20News&b1=ad_bottom1&br=blk&tp=ad_topright&T=wealthstory.ht&s=AOrAvshXTQ2hpbmEg

-- Martin Thompson (mthom1927@aol.com), March 14, 2001