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Christine Chan

SHENZHEN Vanke is the first Shenzhen B share issue to flop, with the share price opening below its issue price at its debut yesterday and closing 9.6 per cent down.

 Shenzhen Vanke, which also has A shares listed in Shenzhen, yesterday closed trade with its B shares off 13 US cents at US$1.23 against an issue price of $1.36.

  The 9.6 per cent slide compares with the Credit Lyonnais Shenzhen B-share index, which lost 14.19 points or 1.66 per cent to close yesterday at 1,077.45.

  The stock is the second B share to list on the exchange after the August riots and follows the listing of Chiwan Wharf Holdings this month.

  Brokers in Hongkong said selling dominated the stock's trade yesterday, with turnover at $856,460 accounting for 61 per cent of the exchange's B-share total turnover of $1.39 million.

  A total of 1.16 million Shenzhen Vanke shares changed hands yesterday.

   The company's offer of 45 million B shares at $10.53 a share, raising $473.85 million, was the largest issue so far this year.

 Analysts said the fall in the share price was within expectations, as it was reflected by investors' cool response towards the sizeable issue, However no one went so far as to describe it as ''disgraceful''.

  In Shenzhen, company secretary and head of the securities department Richard Yu Liang said yesterday he regretted the share's debut performance.

  ''It appears to us that the price has been fixed too high,'' he said.

  Given the pricing and size of the issue, and the present stagnant B share market, the issue lacked appeal, analysts said.

  With an extended business portfolio including mainly property development, the issue had been pitched at too high a price, they said.

    Another factor was the controversy surrounding the subscription of the shares.

    The company said the issue was fully subscribed but failed to inform the market that this had been possible only with the help of the international lead managers Standard Chartered Asia.

   The fact that officials at Shenzhen Vanke and Standard Chartered Asia appeared reluctant to clear up the controversy had made things worse.

  Yet analysts remained divided over the impact of Shenzhen Vanke's debut performance on the future of the B share markets of Shanghai and Shenzhen.

  Some said the listing progress of the new B share issues would probably be slower, considering the poor trading environment of the overall gloomy market.

  To date, eight companies have issued B shares, with only Chiwan Wharf and Shenzhen Vanke listed and the B share market remains flat for some time.

  The lack of swift gains has discouraged investors, although Shenzhen securities authorities this month announced bold plans for improving trade.

  Investors are not sure the measures are practical.

  The B-share market could deteriorate further because another listing candidate, Shenzhen Gintian Industry, said its $407 million B-share offer was under-subscribed.

  Company officials and international lead manager, China Development Finance Co (Hongkong), admit the under-subscription, though an official figure has yet to be disclosed.

  China Development Finance deputy general manager Liang Xiaoting said the exact subscription level would be disclosed, which he said would benefit the development of the China securities market in the longer term.

 One analyst said an under-subscription of shares or a fall in the share price at a debut was not the end of the world.

 However, he said it would make investors more careful and reluctant to enter the China market.

  On the positive side, analysts said with the share-issue flop, pricing of future issues would be more carefully fixed.

   Also, a more selective approach will be adopted for approving companies for listing.



Shenzhen Vanke shunned