B-share firms plan conversion

The Hong Kong Stock Exchange may soon see more companies from the mainland's illiquid B-share market convert their stocks into H-shares, analysts told the Global Times Wednesday.

China Vanke, the country's largest real estate developer by sales, halted trading on both its A-shares and B-shares Wednesday because it was "planning major matters," according to a statement filed to the Shenzhen Stock Exchange. This move has been seen by some analysts as a prelude to the conversion of its B-shares into H-shares, an interpretation which has been confirmed by insiders from Vanke, according to a Securities Daily report.

"It is likely that Vanke will be the next to move following the success of China International Marine Containers (CIMC)," Li Bo, an analyst from GF Securities, told the Global Times.

CIMC, a State-owned container manufacturer, was the first company to convert its B-shares into H-shares. The company officially delisted from the mainland's B-share market on November 29 and went public on the main board of the Hong Kong Stock Exchange on December 19.

"Like CIMC, Vanke is a blue-chip that is listed on both the mainland's A-share and B-share markets, which would make it easier for Hong Kong investors to accept it," Li said.

Encouraged by CIMC's example, several other B-share companies, in addition to Vanke, are currently working with local securities brokerages on similar conversion plans, according to Zhang Xin, an analyst with Guotai Junan Securities.

"Companies are eager to trade in Hong Kong as B-share markets have essentially lost their financing and pricing functions," Zhang said.

Founded in 1992, the mainland's B-share markets, where stocks are traded in either US or Hong Kong dollars, have been hit over the years by rampant speculation as well as a steep decline in trading volume as financial regulators slowly opened the domestic capital market and allowed more local companies to list overseas.

"Financing is not always the primary driver for companies, especially big ones like Vanke, to choose Hong Kong as an alternative listing location. Instead, it is more about just finding a way out for their thinly traded B-shares," Qian Qimin, deputy director of Shenyin & Wanguo Securities' research department, told the Global Times.