It’s time for mainland regulators to consider whether B shares should be abandoned and turned into H shares in Hong Kong or relegated to the status of museum exhibits.
Do anyone still remember B shares? The B shares listed in Shanghai and Shenzhen were the first type of shares allowed to be traded by foreigners on the mainland, beginning in 1992, shortly after the launch of A shares.
All evidence shows the B-share scheme has been a flop
A shares were supposed to be traded by mainlanders only, while B shares – priced in US dollars in Shanghai and Hong Kong dollars in Shenzhen – were for trading by foreigners or mainlanders with foreign currency.
But the mainland markets have changed substantially in the intervening 23 years, along with many regulations and capital control rules.
All evidence shows the B-share scheme has been a flop, for the simple reason there are now many different ways for international investors to trade the mainland stocks.
The first challenger was H shares, which have been listed in Hong Kong since 1993 and now comprise half our market capitalisation. International investors can trade them freely, without restriction.
The second alternative was the qualified foreign institutional investors (QFII) scheme, launched in 2002, that allows selected international firms to trade in A shares.