* China International Marine Containers seeks move to Hong
Hong bourse
* Plans to list through introduction without raising fresh
capital
* Dollar-denominated B share board lost relevance after
reforms
* Foreigners can buy shares via other routes
(Adds analyst comment)
By Pete Sweeney
HONG KONG/SHANGHAI, Aug 15 (Reuters) – A Chinese
transportation firm has applied to become the first company to
migrate to the Hong Kong bourse, as mainland regulators
encourage companies to delist from China’s ailing B-share board.
The foreign currency denominated B-share market lost its
relevance years ago as a sole gateway for foreign investors due
to reforms implemented by China to allow firms to list overseas,
and the market has become increasingly illiquid and vulnerable
to speculation.
Chinese port investor and operator China Merchants Holdings
(International) Co Ltd said on Wednesday that its
Shenzhen-listed China International Marine Containers (Group) Co
Ltd (CIMC) plans to change the listing venue of its
B shares to Hong Kong by way of introduction without
raising fresh capital.
In a filing to the Hong Kong bourse, China Merchants said
CIMC plans to convert all 1.43 billion of its CIMC B shares into
H shares. The company, which makes containers, trailers, tank
equipment and port facilities, will retain its A share listing.
CIMC’s B shares resumed trading Wednesday after a halt that
began on July 13, while its A shares have traded uninterrupted.
The migration to the Hong Kong bourse, if approved, will set
an example for other B-share tickers on the Shenzhen exchange
that are under regulatory pressure to upgrade their ticker
performance or exit the board.
Turning B shares into H shares, the term for shares of
mainland firms listed in Hong Kong, through introduction will be
relatively easy because Shenzhen B shares are already
denominated in Hong Kong dollars. B shares of companies listed
in Shanghai are denominated in U.S. dollars.
However, the fact that mainland passport holders are allowed
to own B shares, yet are not allowed to directly trade Hong Kong
equities, complicates matters.
Zhang Yanbing, an analyst at Zheshang Securities in
Shanghai, said investors who can hold onto their shares should
benefit from higher valuations once the B turns into an H,
because B shares have traditionally traded at significant
discounts to A and H shares issued by the same company.
In addition to legal and regulatory barriers, there are also
questionmarks over investors’ attitudes towards such moves,
he said.
For example, in a statement published on the Shenzhen Stock
Exchange website, CIMC said that it would offer shareholders the
option to cash out their existing B shares at the company’s
closing share price before it halted trading on July 13, plus a
5 percent premium, equalling HK$9.83 ($1.27) per share.
Such a premium is unlikely to be welcomed by shareholders
given that CIMC’s A shares are currently priced at 11.96 yuan
($1.88) per share.
In addition if regulators do not permit mainland holders of
B shares to hold H shares, it begs the question of whether they
could be forced to accept a cash-out.
“This is a bad start,” said Zhang Qi, senior analyst at
Haitong Securities. He said that under the current regime,
mainland shareholders might be permitted only to hold and then
sell their B shares, a sort of one-way ticket.
“Letting (mainland investors) buy Hong Kong shares is
impossible, nobody will take the responsibility, but forcing
people to take cash is irrational.”
The B-share index was down slightly at midday
Wednesday.
In 2012 the China Securities Regulatory Commission (CSRC)
began accelerating the delisting process for low-grade B shares
by establishing a “par value” standard for share prices and
minimum trading volumes.
The new policies put multiple B share tickers on the
Shenzhen exchange at risk of imminent delisting. Many have
suspended trading in their shares, effectively stopping the
clock that measures their share price performance.
($1 = 7.7570 Hong Kong dollars, 6.3586 Chinese yuan)
(Additional reporting by Donny Kwok and Chen Yixin; Editing by
Simon Cameron-Moore)
