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CIMC's path to HK not a road map for B-share firms

By Dong Dengxin (Global Times)

13:48, August 23, 2012

According to many market watchers, the recent move by China International Marine Containers (Group) Co (CIMC) to relocate the trading venue of its Shenzhen-listed, foreign-currency-denominated B-shares to the main board of the Hong Kong Stock Exchange could provide an important example for other firms seeking to flee the mainland's illiquid B-share market.

Yet, the precedent that CIMC may soon establish would hardly lead to the mass B-share market exodus that many are predicting, given the currency conversion problems inherent in such a move as well as the fact that few firms would be able to meet the high listing requirements of the Hong Kong market or be willing to risk losing their investors in a trading venue swap.

According to listing regulations in the mainland, B-shares in the Chinese markets are denominated in Hong Kong dollars at the Shenzhen Stock Exchange and US dollars at the Shanghai exchange. While Shenzhen-listed firms trading B-shares, such as CIMC, would face no currency conversion problems moving to Hong Kong, it would be a different story for their peers in Shanghai. In fact, the lack of an exchange system mechanism to determine a company's share price in a different currency would likely be reason enough to prevent half of the listed firms in the B-share market from moving to Hong Kong.

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