CIMC delists as analysts hold little hope for B-share market future

Source:Reuters Published: 2012-11-30 0:25:07

A marine firm delisted from China's ailing B-share market Thursday, the first company ever to do so, in a step that regulators hope could lead to the winding down of a once-vibrant market that is now an illiquid and speculative backwater.

China International Marine Containers (Group) Co (CIMC), a State-run container manufacturer, took down its B-share ticker Thursday in preparation for a relisting in Hong Kong.

The unusual move could make it easier for other viable firms to do the same.

The foreign-currency-denominated B-share market, established in 1992, used to be the only way for international investors to enter the Chinese stock market. But it lost its relevance years ago as the sole gateway due to reforms implemented by China to allow domestic firms to list overseas, and the market has become increasingly illiquid and vulnerable to speculation.

"The B-share market is moribund, has little value and reforming this market is very complicated so regulators don't have enough motivation to do so," said Zhang Fan, strategist at Tebon Securities.

Thanks to inconsistent reforms over the years, the B-share markets in Shenzhen and Shanghai, with a combined capitalization of about $18 billion, have a mix of foreign and domestic investors, making it an outsize policy headache for China.

Analysts say the only solution is to put the market out of its misery.

In a filing to the Hong Kong bourse, CIMC's parent company China Merchants Holdings (International) Co said it planned to convert all 1.43 billion of its CIMC B shares into H shares; that plan was approved by China's securities regulator earlier in the month.

For CIMC, the migration is made easier by the fact that B shares in Shenzhen are already denominated in Hong Kong dollars, whereas B shares in Shanghai are denominated in US dollars.

Investors holding the company's B shares will have the option to either sell their B shares back to the company for HK$9.83 ($1.27) per share, or accept H shares in the new listing in Hong Kong. The stock last traded at HK$9.70 Thursday.

Reuters



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