China Vanke Co. (000002), the country’s biggest developer by market value, surged the most since June 2010 in Shenzhen after Hong Kong’s regulator approved the company’s plan to shift foreign-currency shares to the city.
The developer received approval to convert China-listed B-shares to shares in Hong Kong, according to a statement to the Shenzhen stock exchange yesterday. Vanke’s Hong Kong-dollar B shares (200002) jumped by the 10 percent daily limit to HK$12.38, the highest in almost four years, as of 11:00 a.m. Its yuan-denominated A shares were 2.7 percent higher at 6.82 yuan.
“Vanke’s B-share price movement over the next few days will be crucial for the conversion plan,” Jinsong Du, a Hong Kong-based property analyst at Credit Suisse Group AG, wrote in an e-mailed note to clients sent yesterday. “The main risk is a potential sector correction that might bring down the peers’ valuation further.”
The developer is seeking to exit the B-share market, which has languished after the nation opened its local-currency stock markets to foreign investors. Vanke announced in January last year it would seek approval for the conversion to widen access to global investors, giving it entry to an exchange where the daily trading value is more than 100 times higher than in the B-share markets.
Vanke Property (Overseas) Ltd., its Hong Kong unit, surged as much as 30 percent, the most since August 2012, and was up 22 percent to HK$10.90.
B-share markets, where foreign institutions and Chinese individuals are allowed to trade, were set up in 1992 to give local companies a way to raise funds from global investors banned from buying securities denominated in yuan. Interest in B shares has waned as the government allowed qualified overseas investors to access the larger, more liquid A-share market and eased limits on foreign exchange.
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