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Chinese Line Up to Become Stockholders : Investing: Public issues are so popular that a lottery system was set up to choose who may buy shares. Sale proceeds are used to pay for development.

March 28, 1994|From Associated Press

BEIJING — Thousands of people lined up at banks across Beijing on Sunday for a chance to buy shares in four state-run companies. It was the first such public offering made by the city.

Police and security guards, some armed with electric batons, were mobilized to prevent a recurrence of rioting that broke out less than two years ago in the southern boom town of Shenzhen over a similar public issuing of stock.

Lines formed before dawn at some banks and other financial institutions authorized to accept applications to buy the stocks. By mid-morning, nearly 300 people were patiently waiting outside two banks in the main central shopping districts of Xidan and Wangfujin.

"I'm trying my luck," said a 38-year-old government employee waiting to buy Beijing Department Store stock. "I'll just buy a few to try it out."

"This company is pretty good," said another potential investor who gave only his surname, Dou. "Everybody in Beijing goes there to shop, so people trust it."

The size of the crowds attests to the continuing attraction to stocks as Communist China shifts to a market economy. Other major forms of investment, such as bank savings and national bonds, have yields far below the inflation rate in China's cities.

In August, 1992, more than 1.2 million people flocked to Shenzhen to buy application forms for stocks at 11 financial institutions. Rioting broke out when the would-be investors accused bank officials, and authorities of hoarding the forms or selling them privately.

Beijing authorities, determined to avoid further rioting, named more than 300 locations to accept deposits for three days from people who want to buy shares. The deposit receipts will be entered next month in a lottery to determine who can buy shares.

Despite the long lines, the stock frenzy that gripped the nation in recent years may be easing as Chinese realize that shares can decline in value as well as rise. Last week, stock prices fell on the nation's two stock exchanges, and the Shenzhen market's index hit its lowest point for the year. The other exchange is in Shanghai.

Many of those standing in line on Sunday said they were aware that stocks could be risky.

"Most Beijing people are relatively conservative," said Dou, a 39-year-old employee of a handicraft factory.

"At most, they won't put more than a third of their savings" into shares, he said.

The other companies, issuing a total of 175 million shares, are Beiren Printing Machinery, Beijing Light Bus and Beijing Town County Trade Center. They are expected to be listed on the Shanghai exchange, but no date for the listing has been announced.

The official China Daily said the offering was city's first. The proceeds will pay for technology, product development and new plants, the paper said.

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