China to Urge State Firms To Use Domestic Listings
online.wsj.com
By RICK CAREW
December 20, 2006
BEIJING -- China will encourage more state-owned enterprises to sell shares domestically as conditions on the country's stock markets improve, a senior government official said yesterday.
Most of China's major state firms have listed their shares on overseas markets in recent years, a trend that has been a boon for Hong Kong in particular. Chinese regulators have long struggled to create a domestic stock market that has adequate listing standards and enough trading volume to handle shares of the nation's biggest companies.
That has started to change this year, after regulators pushed through changes to locally listed firms' cumbersome share structure and encouraged a series of large initial public offerings. China's accounting standards have moved closer to global norms, and more local companies are hiring international accounting firms to audit their books.
"With the further improvement of China's capital market, enterprises now have more options," Li Rongrong, chairman of the state-owned Assets Supervision and Administration Commission, told reporters. Future initial public offerings would likely involve selling shares on both the Hong Kong and domestic stock markets, he said.
International investors are still largely unable to buy shares on domestic exchanges.
The new stream of domestic listings has included several state-owned giants, including two of China's four biggest banks -- Bank of China Ltd. and Industrial & Commercial Bank of China Ltd. Market indexes have soared to records this year as local investors see the stream of new listings solidifying the future of the domestic exchanges and bringing up the overall quality of the market.
"Centrally owned state enterprises have the responsibility to contribute positively to the domestic stock market," Mr. Li said.
His agency oversees 161 enterprises owned by the central government, including the country's phone companies, airlines, and electric utilities, though not its banks.
Profits at state firms have been booming, and the government is planning to take a share of that in the form of dividends next year. Sasac forecast that the companies it supervises would realize a profit of 720 billion yuan ($92 billion) on eight trillion yuan of revenue in 2006; it didn't give a precise comparison for 2005, but said profits already recorded for the first 11 months of this year are up 19% from the same period last year. |
