Vanke getting out of B-share market

China Vanke, the country's largest listed property developer by sales, is expected to announce its Hong Kong listing plan Friday to expand its funding channels.

The Shenzhen-based home builder will unveil its plans for converting its Shenzhen-listed B shares into Hong Kong-listed H shares, Thomson Reuters financial market publication IFR reported Thursday, citing unnamed sources.

The announcement will possibly come Friday, the first day Chinese mainland markets resume trading after the New Year holidays, IFR said.

"The move, I think, is mainly triggered by the illiquid B-share market," Cai Junyi, chief investment consultant from Shanghai Securities, told the Global Times Thursday, noting that he expects the same problem to prompt more companies either to repurchase their shares or to convert B shares into H shares.

The B-share market, founded in 1992, has its stocks traded either in US dollars in Shanghai or Hong Kong dollars in Shenzhen. Originally the only way for overseas investors to take part in the Chinese stock market, the B-share market has since suffered from speculation and a sharp decline in trading volume as regulators gradually opened the domestic capital market and allowed more local companies to list overseas.

Hui Jianqiang, a senior property researcher at the E-house China Research and Development Institute, told the Global Times Thursday that he thinks Vanke is "trying to increase its capability to handle risks in the future," as the country's real estate industry faces some uncertainties ahead.

In 2010, the country began to implement a series of cooling-down measures in the overheated real estate sector.

"Such measures definitely put pressure on small and medium-sized property developers, but building giants like Vanke, I believe, are still doing fine," said Hui, noting that listing in Hong Kong is a good source of backup funds, which large companies need to face possible market risks.

During the third quarter of 2012, Vanke saw its net income more than double to 1.35 billion yuan ($216 million), signaling a possible real estate rebound in the world's second largest economy.

Vanke has suspended trading of both its A shares and its B shares since December 26, because the company is considering a Hong Kong listing following the success of China International Marine Containers (CIMC), according to a report by the official Securities Times.

State-owned container manufacturer CIMC delisted from the B-share market on November 29 and went public in Hong Kong on December 19, making it the first company to convert its B shares into H shares.

CIMC's B-share investors were asked to either sell their B shares or hold H shares equivalent to the amount of their B shares. Analysts believed Vanke would offer the same two options for its investors.