Davis Zhang, a long-term victim of the collapse of the mainland's hard-currency B-share market, dismisses reports that the market regulator plans to bail out investors as more empty promises.
"Whatever solution is provided, we will still lose money," he said. "Speculation about a top-to-bottom reform of the market could only create a rally in the short term and help us cut some of our losses."
Fuelled by talk of reform, the Shanghai B-share Index recorded an unbroken 15-day run-up from December 14 to January 8, advancing 17.7 per cent in the process to 262.65 points. It then gave up 3.3 per cent of those gains in the following three days, ending at 254.02 on Friday.
But despite that strong rally, many early investors in the B-share market, which saw share prices slump by as much as 35 per cent from a record set in October 2007, are still carrying big paper losses.
B-share investors like Zhang saw a ray of hope when China International Marine Container Group (CIMC), the world's largest container maker, quit its mainland B-share listing to list in Hong Kong last month.
"But in hindsight I realise I should have cashed out during the rally rather than converting my B shares into H shares," said Zhang. "My B-share investments have given me too much pain and it's time to come to a full stop."
Beijing created the B-share market in 1992 to help state-owned companies raise foreign capital. The US dollar-denominated B shares on the Shanghai Stock Exchange and their counterparts traded in Hong Kong dollars on the Shenzhen Stock Exchange were reserved for overseas investors. But the market on which some 100 firms were eventually being traded soon turned out to be illiquid as it failed to attract foreign investors.
In order to boost liquidity, Beijing liberalised the B-share market in 2001, allowing mainland residents to buy the shares with their own foreign currency. But the move triggered a boom-to-bust cycle, leaving thousands of small investors like Zhang counting their losses.
Keen to punt on the tiny market in the belief that it was easy for funds to dart in and out of the B-share firms and make profits, some investors had even asked their relatives and friends abroad to open trading accounts so that they might trade the shares before the regulations were eased.
Zhang invested about US$5,000 in B shares in the late 1990s when they were trading at a huge discount to yuan-denominated A shares. He hoped the investment could eventually bring him a handsome return.
But plunging share prices, and a near-25 per cent appreciation in the Chinese yuan over the past decade, has eroded the value of his B-share portfolio in terms of the local currency.
"It has been a decade of waiting, and truly a long-term investment," Zhang said. "I am totally disappointed now."
But despite Zhang's misgivings about the regulator's efforts to rescue investors, the so-called B-H conversion that allowed CIMC to relist its shares in Hong Kong has been hailed by regulators as an ideal way to protect investors' interests.
At present, the price of CIMC's H shares is more than 50 per cent higher than its B-share closing price on the Shenzhen exchange. The successful relisting is set to spawn imitators amid positive remarks recently by Hong Kong Exchanges and Clearing chief executive Charles Li Xiaojia, who said the local bourse would welcome mainland B-share firms wishing to relist in Hong Kong.
China Vanke, a major mainland property developer, and Livzon Pharmaceutical Group both moved to suspend trading of their B shares recently, saying they were making important plans affecting the future of the companies. The requests for a halt in trading are believed to be related to B-H conversions, which sparked an across-the-board B-share buying frenzy.
But for Zhang and his fellow investors, there is a catch - mainland investors are barred from trading shares in Hong Kong.
"What's the point of holding H shares if we are unable to trade them?" asked Zhang. "It could be another long wait before the government allows us access to the Hong Kong market."
CIMC offered to buy out B-share owners who were reluctant to convert their holdings into H shares and about 10 per cent of the investors chose to do so, although the offer of HK$9.83 per share represented a less than 2 per cent premium to CIMC B shares' closing price.
But the B-H conversion will be far from enough to solve the legacy left by the B-share market, and many burned investors were angry when they realised the B-H conversion would not spell the end of the B-share market, with all B shares becoming H shares.
Guotai Junan Securities said only 10 B-share firms would qualify for Hong Kong listings based on the exchange's listing standards.
So while the feel-good rhetoric from mainland regulators could entice thousands of investors to return to speculate on the slumbering market, it offered no long-term remedy, said a Shanghai-based fund manager.