Once again there's talk of getting the through train - or something like it - back on track. Finance officials in Shenzhen are proposing a new cross-border scheme that would allow mainlanders to invest in the Hong Kong-listed H shares of mainland companies through depositary receipts traded on the Shenzhen stock exchange. In return, Hong Kong and international investors would be permitted to trade Shenzhen-listed B shares through the Hong Kong exchange. At first, this sounds like a good idea all round. But on examination, it becomes clear that the proposal is not so much for a through train but rather for a stopping service. First of all, it is hard to see why anyone would be interested in investing in B shares on the Hong Kong stock exchange. B shares, in case you've forgotten, are foreign-currency-denominated stocks of mainland companies listed on the Shenzhen and Shanghai exchanges. They were introduced in 1992 exclusively for foreign investors, with the Shanghai-listed stocks priced in US dollars, and Shenzhen B shares in Hong Kong dollars. The idea never took off. Foreign investors remained wary, partly because of concerns over poor standards of corporate governance. And even though B-share investment was opened up to mainlanders with foreign-currency bank accounts in 2001, liquidity remains thin, and B shares continue to languish at a steep discount to their A-share counterparts. For example, at yesterday's close, Shenzhen-listed B shares in property developer China Vanke were priced at a 30 per cent discount to the company's A shares (after correcting for the exchange rate differential) (see the first chart below). And Vanke is a relatively popular stock. According to data from Sean Darby at Nomura, the average discount among Shenzhen B shares is about 55 per cent. That means B shares are cheap, but allowing them to trade in Hong Kong is unlikely to spark an increase in interest or boost prices. After all, Hong Kong investors can already buy B shares in Shenzhen if they want to. But for the most part, they don't. The introduction in 2003 of the qualified foreign institutional investor initiative, which allowed offshore investors to buy yuan-denominated A shares, rendered B shares redundant, and they have since been largely forgotten by Hong Kong investors as an asset class. But that doesn't mean Hong Kong would get a bum deal if the Shenzhen suggestion went ahead. Far from it; because the idea of listing depositary receipts on H shares in Shenzhen is altogether more interesting. The original through train was delayed largely because Beijing, afraid of destabilising capital outflows, baulked at allowing mainland investors the freedom to shift capital offshore on their own account. The depositary receipt proposal sidesteps the problem neatly. Depositary receipts are created when a broker buys a block of the underlying stock and places it with a custodian bank, which then issues a receipt that can be traded on a foreign market - or in this case in Shenzhen. Mainland investors would still be able to access cheap H shares, which as the second chart below shows, were trading yesterday at a substantial 31 per cent discount to their mainland-listed A-share counterparts. But because depositary receipts are created in fixed quantities by an intermediary, the mainland authorities would be able to set a ceiling on the amounts invested, which is what they want. And because the brokers have to buy the underlying H shares in Hong Kong to create the depositary receipts, capital would still flow into the Hong Kong market, lifting local prices. So although the new proposal is less a direct express than a stopping service, the ultimate destination turns out to be much the same as for the original through train.