January 21, 2013 / 2:51 AM / 5 years ago

UPDATE 2-China Vanke shares soar on B-share migration to Hong Kong

* Vanke A and B shares hit 10 pct limit up

* B share index outperformed CSI300 since December

* Vanke following CIMC’s successful migration in Dec

* Vanke’s HK unit warns of significant profit decline (Updates throughout, includes Vanke Properties Overseas’ profit warning)

By Pete Sweeney

SHANGHAI, Jan 21 (Reuters) - Shares in China Vanke Co Ltd shot up by their daily limit on Monday after the major property developer said its foreign-currency B-shares would move to Hong Kong, the second firm to have left the mainland’s moribund B-share market in Shenzhen.

Vanke’s B-shares, which are denominated in Hong Kong dollars, jumped 10 percent - the maximum intraday gain mainland shares are allowed to post - to HK$13.75 ($1.77) per share from the HK$12.50 at its last close on Dec. 25.

Its yuan-denominated A-shares also jumped 10 percent, while shares in its Hong Kong-listed subsidiary Vanke Properties Overseas Ltd spiked 12.8 percent to their highest close since Sept. 17.

Vanke Overseas shares have been climbing steadily on expectations that 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.

After markets closed on Monday, Vanke Overseas said it expects a “significant decrease” in full-year net profit and net assets in 2012, largely due to discontinued operations after China Vanke’s purchase in May of a 73.9 percent stake in the company formerly known as Winsor Properties.

Trading in Vanke’s Shenzhen shares has been suspended since Dec. 26 pending an announcement. That finally came after markets closed on Friday, when China’s largest developer by revenue said it would move its B shares to Hong Kong.


The positive response to Vanke’s announcement follows the successful migration of China International Marine Containers’ (CIMC) B shares to Hong Kong in December.

CIMC’s new Hong Kong shares have gained over 26 percent since their first day trading in Hong Kong on Dec. 19, compared with a 6.5 percent rise in the China Enterprises Index of top Chinese listings in Hong Kong.

It is also good news for Chinese regulators, who have struggled to find a way to close down the B-share market, a once-vibrant market for foreign investors in Chinese equities that policy changes have rendered a little-traded backwater.

Chinese stock markets have rallied strongly since Dec. 26 when Vanke suspended trading, but B shares have outperformed the broader onshore China benchmarks on what analysts have said is optimism that other firms will be able to execute similar migrations.

The Shenzhen B-share index has now risen more than 18 percent since Vanke halted trading on Dec. 26. compared with the 6.2 percent rise for the CSI300 of the top Shanghai and Shenzhen A-share listings over the same period.

Chongqing Changan Automobile Co Ltd and glass maker CSG Holding Co Ltd were also cited as high-profile companies whose B shares meet Hong Kong listing criteria.

Changan Auto’s B shares surged 8.8 percent on Monday while CSG’s climbed 4.9 percent. ($1 = 6.2154 Chinese yuan) ($1 = 7.7529 Hong Kong dollars) (Additional reporting by Clement Tan in Hong Kong; Editing by Edwina Gibbs and David Holmes)

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