* Regulators struggle to shut down obsolete B-share market
* CIMC shares jump nearly 20 pct after move to Hong Kong
* CIMC inspires surge in Shenzhen B-share volumes, values
* Benefits unlikely for smaller B-share tickers -analysts
By Pete Sweeney and Clement Tan
SHANGHAI/HONG KONG, Jan 7 China's biggest ship
container maker has revived its moribund B-shares - mainland
shares priced in foreign currencies - by relisting them in Hong
Kong, sparking new life in other B-shares that may be able to
emulate its exit from an obsolete market that regulators want to
China International Marine Containers (CIMC) delisted its
B-shares in late November, abandoning a once-vibrant market for
foreign investors that policy changes rendered a little-traded
backwater, and on Dec. 19 resurrected them as H-shares
, or Hong Kong-traded shares of mainland companies.
Despite a lacklustre start, CIMC's H-shares have gained 20
percent in their brief two-and-a-half week life, triggering a
hunt for other Cinderella B-shares that might follow.
"Investors weren't too sure what to expect with the first
B-to-H relisting, but after what happened with CIMC, I think
people are starting to get interested," said Hong Hao, chief
strategist at Bank of Communications International Securities.
"The B-to-H concept will likely remain a very strong
thematic play this year."
The firms considered most likely to follow CIMC to Hong Kong
are big companies such as China Vanke Co Ltd
, China's largest listed property company, which a
Hong Kong newspaper said could make an announcement as soon as
Trading in Vanke's shares was halted on Dec. 25 pending an
announcement, with the B-shares last changing hands at HK$12.50
per share, their highest since mid-2009. That put the total
value of its outstanding B-shares at HK$16.4 billion ($2.12
billion). Vanke could not be reached for comment during office
hours on Friday.
Hong Kong-listed Vanke subsidiary Winsor Properties Holdings
Ltd also surged 22 percent last Thursday to its
highest in more than three months, on expectations its business
would be reorganised if Vanke B-shares move to Hong Kong, where
exchange rules require issuers with two or more listed companies
to guarantee they will not compete directly with each other.
Chongqing Changan Automobile Co Ltd and glass
maker CSG Holding Co Ltd are also cited as
high-profile companies with B-shares that meet Hong Kong listing
criteria. Changan Auto's B-shares jumped 7.8 percent on Friday
while CSG's climbed 9 percent, far outperforming their benchmark
indexes, in heavy trading volumes.
The Shenzhen B-share index, which hosts B-shares
denominated in Hong Kong dollars, has surged 23 percent from a
Dec. 3 nadir, outperforming a 20 percent jump in the CSI300
index of the top Shanghai and Shenzhen
yuan-denominated A-shares over the same period.
On Friday, it closed up 3.7 percent, compared with a 0.1
percent increase in the CSI300 index. Volume for the day was
1,799 share units, the heaviest trading day since November 2010.
But the rally has been more modest on the U.S.
dollar-denominated Shanghai B-share market, which is up
15 percent since Dec. 3.
And while B-share buying may pay off for investors focusing
on promising tickers, it does not address the fundamental
problem of what to do with the bulk of B-share companies that
analysts say have little business being listed at all.
"Any attempt by regulators to do something with the B-shares
is a move in the right direction," said Chris Powers, analyst at
Z-Ben Advisors. But for tickers with no liquidity, he added,
Beijing needs to figure out how to get them off the boards.
For CIMC's investors, the pop marks a long-awaited payoff.
Shareholders were originally offered the option to cash out
their B-shares at the company's last traded share price plus a 5
percent premium, equal to HK$9.83 per share. Ninety percent of
its B-share holders opted instead for the move to Hong Kong.
It turns out they made the right choice. As of last Friday,
when the Hong Kong shares ended at HK$15.34 each, their holdings
were worth more than half again as much as the cashout offer.
($1 = 7.7508 Hong Kong dollars)
(Editing by Edmund Klamann)