SHENZHEN'S B-share market has become a chilly place for Chinese stocks. Only a handful of the 24 shares listed there trade actively, and turnover languishes between US$500,000 and a few million.
The solution, as more and more companies see it, is a secondary listing in Singapore. But is it a practical step or a sign of desperation? 'The idea has received a positive response from all authorities,' said Maurien Yau, assistant China manager at DBS Securities, which is helping to prepare China Merchant Shekou Port Service to become the first B share to list in Singapore.
'Everyone wants to revive the Shenzhen market, and they are willing to try anything.' The idea is that a secondary listing abroad will increase liquidity, widen a company's shareholder base, improve its ability to raise funds in the future and raise its profile internationally.
Singapore, with its stable political environment and advanced stock market, has the additional advantage of possibly allowing companies to post higher price-earnings ratios (P/Es) than would be possible in Shenzhen, because there is less risk.
Chinese companies can also opt for Singapore's Central Limited Order Book international system for direct share trading, instead of a direct secondary listing on the exchange's main board.
The risk, say some analysts, is that the idea may never take off. The few companies which move some trading there may lose vitality outside their natural market in Hong Kong and China, with little or no real gain in fund-raising.
