China starts delisting shares

IPOs peak near the top of social mood and delistings surge near the bottom.

The big financial story in China over the previous week-plus has been the fate of a B share facing delisting, the first since China toughened stock market regulation this month.

China's B Shares Tumble on Delisting Fears

Monday's selloff came as shares of Tsann Kuen (China) Enterprise Co., a Fujian-based manufacturer of electronics and office equipment, traded below their par value of one yuan (about 16 U.S. cents) for the 16th consecutive session Monday. Under China's new delisting rules that took effect July 7, a company can face removal from domestic stock exchanges if its shares end below their par value for 20 consecutive sessions.

Tsann Kuen said in a statement July 13 that it expects to swing to a net loss of between 18 million yuan ($2.8 million) and 23 million yuan in the first half because of weakening demand in overseas markets and a stronger yuan. It recorded a net loss of 10.77 million yuan in the first quarter.

Shenzhen-listed Tsann Kuen, in compliance with the new stock-exchange rules, has filed daily warnings for the last six sessions about the risk of a delisting of its shares. The new delisting rules state that a listed company whose shares have been below their par value for 10 consecutive sessions must issue statements disclosing the risk of a delisting in each subsequent session.

If Tsann Kuen's shares continue to trade below par for the another four sessions, the bourse would then transfer the firm's shares to another board, which is designed to be a holding area that caters to residual demand for the stock following the decision to delist the company. After a 30-day period of trading on the new board, the company's shares would officially be delisted.

Today is the last trading day for Tsann Kuen (闽灿坤) B shares.

A discussion of what follows is here, in Chinese: 闽灿坤B停牌续命 准备后事进入场外市场