CIMC plans to relist B shares in HK

Container firm plans to escape slumbering market by converting stock - and others may follow suit

PUBLISHED : Thursday, 16 August, 2012, 12:00am
UPDATED : Thursday, 16 August, 2012, 11:08am


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China International Marine Container (Group), or CIMC, the world's largest container maker, plans to relist its B shares on the Hong Kong market, reflecting mainland regulators' latest efforts to phase out the moribund hard-currency B-share market.

The company said in a statement yesterday that the Shenzhen-listed B shares would be moved to the Hong Kong exchange, as it tries to escape the illiquid market and internationalise its businesses.

CIMC was the first mainland company that proposed converting B shares into Hong Kong-listed H shares. If the plan is successfully implemented, a clutch of other B-share firms such as China Merchants Property Development will follow suit, according to two investment bankers briefed by company executives about the plans.

CIMC's statement was endorsed by the mainland securities regulator, the sources said, adding that the China Securities Regulatory Commission (CSRC) will step up efforts to solve the problem confronting the slumbering B-share market.

"I believe this would not be the last company to do so and we may see more B-share companies considering listing in Hong Kong," said Charles Li Xiaojia, chief executive of Hong Kong Exchanges and Clearing.

Beijing created the B-share market in 1992 as a way to help mainland firms raise foreign currency. The class-B shares are traded in US dollars on the Shanghai Stock Exchange. The Shenzhen-listed B shares are denominated in Hong Kong dollars.

The market turned out to be a flop as most companies seeking to raise foreign funds preferred to launch initial public offerings (IPOs) overseas.

To date, only 100-odd companies have issued B shares, and not a single IPO has been launched since 2000. The CSRC was prompted to phase out the B-share market after Tsann Kuen (China) Enterprise edged closer to a delisting earlier this month when its B shares traded below the equivalent of one yuan for 18 straight sessions. Under the CSRC's new delisting rule, a company must withdraw its shares if they fall below one yuan for 20 straight sessions. That could spell the end of the B-share market as many stocks would follow Tsann Kuen due to their cheap valuations.

Last week, Shenzhen bourse chief Song Liping said firms voluntarily delisting B shares could relist on the yuan-denominated A-share market without undergoing the IPO review process. CIMC's B-share investors could receive cash of HK$9.83 per share in a buy-back. Its B shares rose 3.3 per cent to HK$9.67 yesterday.