The red-hot domestic stock market has attracted overseas listed companies to return to the homeland, especially the red-chip stocks listed on the Hong Kong exchange. China Mobile plans to issue A shares in the second half. China Telecom, however, had to defer a similar plan. Even China Construction Bank, which previously said it had no plan to return, expressed willingness to come back, according to sources close to the issue.

Analysts believe a new rule concerning red-chip listing in the mainland market will be issued in June. Based on the draft rule, China Netcom, Lenovo Group, COFCO Group and Huarun Power are qualified and could be the first batch of companies selling shares in the mainland bourses. China Unicom and Dongfeng Automobile do not qualify under the rule.

The return of red-chips makes the domestic market more "internationalized" and have better investment prospects. It also make it possible for the bourses to see more initial public offerings in the second half, which helps drain the excessive liquidity in the market as a capital outflow channel. But there are also difficulties for the companies, such as adjusting themselves to the mainland securities regulations and the pricing problem, said analysts.

Although the stocks have been recovering from the previous losses for a week, the volatility in the market has diverted more investors to find shelters in mutual funds.

On Wednesday, after seeing six consecutive days of growth, the new A-share account opening was low at 187,145, while the new accounts opened for fund transaction jumped to 139,372, from Monday's 27,000 and Tuesday's 34,000. Since June 4, the daily new fund account opening had been between 20,000 and 40,000.

The last times when China Depository and Clearing Co Ltd registered such big amounts of fund account opening were May 31 with 449,421 accounts and June 1 with 187,972, when investors realized the plunges in the stock market caused by the stamp tax rise were not "temporary".

Mutual funds, which invest heavily in good-performing blue-chips, have been always seen as a safe heaven for investors. On Tuesday, the index finished 1.4 percent up on the six consecutive day of growth. But also on that day when the market heard the consumer price index grew 3.4 percent last month, the Shanghai Composite Index plunged 60 points, making the daily spread at 163 points.

The reason for the increase in new mutual fund accounts the next day, might be a result of fear for further tightening measures may trigger a new round of continuous drops, some analysts believe.

There is no specific timetable for launching the index futures but China is making preparations for the new product, said Tu Guangshao, vice chairman of the China Securities Regulatory Commission (CSRC).

The regulators are drafting rules and regulations, establish a supervision framework for the new products and improve risk preclusion and control mechanism for futures brokers. And most recently, education to investors has been brought up to the table.

Tu also said the mainland and Hong Kong stock markets have complementary relations, and the cooperation between the two sides is the mainstream trend. The mainland authorities will continue to support domestic companies to list in Hong Kong, Tu said.

The vice chairman believed the difference in prices of A and H shares of a same company listed in the two places are not "abnormal". The markets were different after all, he said, and the qualified domestic institutional investor and qualified foreign institutional investor schemes will help diminish the gap and make the duo more "balanced".

Fund managers are now allowed to buy mutual fund products themselves, said CSRC yesterday. Professionals at fund management companies or fund trust banks can buy open-end funds, but are still restricted from purchasing closed-end ones, according to a detailed rule released by CSRC, taking effect immediately.

By yesterday, there were 75 listed companies on the two exchanges that hadn't finished the split share reform and carried an S title before their company names. Of the 75 companies, 41 had entered the reform process. The rest hadn't made a move.

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