What Is The Path To Solve The Remaining Problems Of B-Shares?

Promoting RMB

At present, B shares and A shares are merged to solve the historical problems of B shares thoroughly. It is also an obstacle for the international index company to incorporate A shares into the emerging market index to clear the two prices of one market.

The time has come to terminate the historical problems of B shares.

What path do we need to solve the remaining problems of B shares? Let's first understand the location and issue of the B-share market in China at that time.

The official name of B shares is RMB special stock.

It is a foreign capital stock traded on the stock exchanges in China (Shanghai, Shenzhen), which is denominated in Renminbi, subscribed to and traded in foreign currencies.

The registered and listed places of B share companies are in the territory.

From a legal point of view, this definition is very clear, B shares are RMB (special) stocks, the denominations are priced in Renminbi, and are traded in the Shanghai and Shenzhen stock exchanges in China.

If so, then

The target investors are foreign capital. After 2001, foreign investors and mainland residents coexist, but the currencies are specific to the US dollar and Hong Kong dollar.

The recently qualified domestic investor (QDII2) mechanism is advancing and will allow individuals to invest in offshore markets.

Regulatory authorities revealed that the QDII2 qualified domestic individual investors overseas investment pilot management measures will be released soon.

At the same time, foreign exchange management will cancel the requirements of ex ante approval in most cases. Effective post supervision and macro Prudential management system will be established.

Shanghai FTA "gold reform 49" is about to come out, which contains the details of QDII2.

Will domestic investors invest in the domestic B shares market? Will they be limited by the amount? Of course not.

Accordingly, I believe that the way out for B-shares is to directly merge with A shares.

Four suggestions are proposed for this purpose:

1. Domestic residents directly change the face value of B shares by 1:1.

The face value.

In law, a listed company canceling part of the B shares and increasing the corresponding A share shares, the new A shares can be set up for a closed period of 1 months.

Two, overseas investors or domestic residents may also choose the right to foreign currency. The method is to adopt foreign currency cash according to the average price of A shares in 20 trading days, and then exchange them into foreign currencies at 10 percent off of the exchange rate at the same day, and then be paid by listed companies. The discount is based on factors such as price fluctuation, exchange rate changes and the wishes of the additional persons.

In law, a Listed Company repurchased part of the B-share shares; at the same time, it issued A shares to the market with the same share of shares at the price of 5% off (or to the old shareholders of A shares), and the total shares of the listed companies remained unchanged. This part of the A shares could also be set up for 1 months.

Three, allowing a public fund to set up a B-share fund. The operation can be approved by the quota of QDII. Investors use Renminbi to subscribe for the share of the fund, and the fund company will operate directly after the market price is converted into foreign currency, and then convert into Renminbi at the exchange rate at the time of redemption.

Four, for listed companies with A and B shares, the opportunity to buy back B shares through the market should be given. The condition is how much B shares can be repurchased and how much A shares will be issued. The operating rules can be applied to the regulatory authorities to issue additional A shares according to an integer of 5% yuan per buyback. At the same time, it is suggested that the examination and approval be changed for the record.

If B shares open to domestic residents in 2001 is a significant opportunity in the history of B shares, then, in the course of promoting RMB internationalization, B shares will be merged with A shares to thoroughly solve the historical problems left by B shares, and the international index company will bring A shares into the emerging market index to sweep the two price barriers of a market.

It is foreseeable that B shares will usher in the second major investment opportunities.