China Vanke Co. (Shenzhen stock code 000002.), China’s largest property developer by market value, may soon list its shares in Hong Kong by way of “introduction,” China Business News reported Thursday, citing unnamed sources.
The so-called listing by introduction is for companies already listed in a market that wants to add another trading venue. It doesn’t have to raise additional funds as no new shares will be issued. Vanke, China’s largest property developer by market value, has hired Citic Securities Co. to work out a plan which could allow it to transfer its Shenzhen-listed, Hong Kong dollar-denominated Class B shares to the Hong Kong stock exchange, the report said. Vanke could then trade on both the Shenzhen and Hong Kong stock exchanges.
China’s B-shares are denominated in Hong Kong dollars in Shenzhen and U.S. dollars in Shanghai. But trading of the foreign currency-denominated stocks has remained thin for years as foreigners have opted to access Chinese stocks through Hong Kong, or buy yuan-denominated A-shares in China.
With the tepid trading interest in almost all companies holding B-shares, and as China’s regulator hasn’t worked out a uniform program to solve the problem, some companies are moving to other stock exchanges to tap more potential investors.
Earlier this month, China International Marine Containers (Group) Co. (Hong Kong stock code 1339)became the first Chinese company to transfer its listing to Hong Kong from China’s B-share market by way of introduction.
Based on Tuesday’s closing level of 12.50 Hong Kong dollars, Vanke’s Class B shares are worth around 16.44 billion Hong Kong dollars (US$2.1 billion). Vanke’s shares, including the Class B shares and its yuan-denominated Class A shares, have been suspended from trading since Wednesday as the company said it was planning an important issue that would affect its stock price. In a statement to the Shenzhen Stock Exchange Wednesday, Vanke didn’t specify the issue, but said its stock will resume trading when a statement regarding the issue is published.
One likely effect of China Vanke’s potential B- to H-shares conversion is that Hong Kong investors will have one more blue-chip-calibre mainland developer to choose from, and some fund diversion from China Overseas Land (0688) and China Resources Land (1109) is likely.