The Hong Kong Stock Exchange isconsidering new rules governing different classes of shares
following a spate of new "B" share issues by leading local firms,
exchange chairman Ronald Li said.
    He told reporters the rules will allow settlement of "A"
share transactions with cheaper "B" shares at a ratio equivalent
to their par values. But "A" shares cannot be used to settle
transactions of "B" shares.
    Jardine Matheson Holdings Ltd &lt;JARD.HK>, Cheung Kong
(Holdings) Ltd &lt;CKGH.HK> and Hutchison Whampoa Ltd &lt;HWHH.HK>
have all announced proposals for issuing "B" shares.
    These would have substantially reduced par values but would
have voting rights equal to the existing shares or "A" shares.
    Li said the exchange does not want to restrict the issue of
"B" shares but it is concerned about huge discrepancies between
market prices of existing "A" and "B" stocks.
    The exchange said yesterday it will not accept further
proposals by listed firms to issue such new shares.
    Li said that if the exchange did not take action numerous
other companies would make similar issues. &lt;Evergo Industrial
Enterprise Ltd>, now suspended from trading, has already made
such a proposal, he added.
    Li said the exchange will consult legal advisers in Britain
for the proposals from Cheung Kong, Hutchison and Jardine
Matheson. If the rules of settlement cannot be implemented, the
three firms must present alternative methods to guarantee
reasonable price differentials between the "A" and "B" shares.
    Both Jardine and Hutchison declined comment. But local
newspapers quoted Cheung Kong's director Albert Chow as saying
the firm will withdraw its issue if the new rule is approved.
    Analysts have said the "B" shares are designed largely to
protect the interests of majority shareholders. There is little
liquidity in them and they trade at big discounts.
    Stock brokers noted the "A" shares of Swire Pacific Ltd
&lt;SWPC.HK> closed at 22 H.K. Dlrs today while the "B" shares ended
at 3.95 dlrs. The stocks have a par value of 60 and 12 cents
respectively, or a one-to-five ratio. At those levels that
represents an "A" share premium of about 11.4 pct over the "B"
shares.
    Li said the exchange has not considered any measures
against existing "B" stocks. Other existing "B" stocks are all
issued by units of Wharf (Holdings) Ltd &lt;KOWL.HK>, including
&lt;Hong Kong Realty and Trust Co Ltd>, &lt;Lane Crawford Holdings
Ltd> and &lt;Realty Development Corp Ltd>.
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