The largest publicly traded property developer in China, by market value, China Vanke Co. has announced its plans to move the trading operation of its foreign currency dominated shares to the Hong Kong market in an attempt to reach out to more investors. The company has already filed its proposal to the Shenzhen Stock Exchange and it is proposing a conversion of the Shenzhen listed B shares to the H shares of Hong Kong. The trading in both Vanke’s A and B shares have been put on hold since 26th December and is expected to resume in this week itself (It may start on 21st January, according to market speculations). Incidentally, B shares of the company are denominated in Hong Kong Dollars, whereas, A shares are primarily denominated by Yuan.
Incidentally, China International Marine Containers Group Co. has already left the foreign dominated B share market and entered the Hong Kong market. Thereby, Vanke is the second company in recent times to do so. The daily trading volume for the Hong Kong market is around 3000 times higher, according to statistics. After the move is completed, Vanke will have continued direct access to the global investors, which was not possible in case of domestic A shares on the Chinese bourses.
According to the proposal, if the B share holders don’t opt for swapping to the H shares, they will get cash option. Incidentally, buyers such as Hillhouse Capital Management Ltd., China Resources Co and Government of Singapore Investment Corp. have agreed to pay a sum of HK$13.13 each share to the investors who plan to exit.
Incidentally, in 1922, the B share market was set up in an attempt to allow the Chinese individuals and foreign institutions to participate in trades, so that local companies can raise their funds with help of the global investors. However, the interest in this market waned over the years as the Chinese Government later approved qualified overseas investors to have access on the A share market and also eased the limits imposed on foreign exchanges. Incidentally, the A share market is larger and more liquid when compared to the B share market.
Before the suspension of trading on 26th December, Vanke had 1.31 billion B shares, with a total worth of $2.1 billion. It accounts for 12% of the total capital of the company.