SOEs focus on domestic stock market

By Zhao Huanxin (China Daily)
Updated: 2006-12-20 07:20

The stock market's bull run has certainly not gone unnoticed by large State-owned enterprises (SOEs) which for the first time in more than a decade will focus on raising capital domestically rather than overseas.

SOEs now have a wider choice of listing markets; and more SOEs listed overseas will return to the mainland market, Li Rongrong, chairman of the State-owned Assets Supervision and Administration Commission (SASAC), said yesterday.

At the same time, SASAC will try its best to make sure that listed SOEs will live up to the expectations of investors at home and abroad.

Li did not specify how many large SOEs will launch domestic initial public offerings (IPOs) this year but said he was "certain" that some overseas-listed SOEs will accelerate the pace of going public back home.

China Life Insurance, which is listed on the New York and Hong Kong stock exchanges, has won the approval of the securities regulator to issue shares on the Shanghai Stock Exchange next month.

The country's biggest life insurer is planning to raise as much as 25.5 billion yuan (US$3.23 billion), the second-largest public offering in the A-share market after Industrial and Commercial Bank of China (ICBC), the country's biggest lender.

In October, ICBC raised about US$21 billion in a dual listing in Hong Kong and Shanghai, where the offer was oversubscribed 25 times.

China's benchmark stock index rose 0.99 per cent to an all-time high last Thursday, following reforms in the capital market and inflows of funds from local and foreign investors.

The situation has prompted many to think that for the first time in a decade, the stock market is able to reflect the booming economy.

"The central SOEs will contribute to the healthy development of China's capital market," Li said. "We'll strive to improve the performance of the central SOEs, which I believe would continue to provide good returns to investors."

Li Yongsen, a researcher at the Finance and Securities Research Institute affiliated to Renmin University of China in Beijing, yesterday said the shift of larger SOEs to domestic bourses will, in turn, offer more choices for investors.

China has 161 central SOEs under SASAC's supervision, which are expected to generate a record 720 billion yuan (US$92.3 billion) in profits this year, according to the latest projections by the commission.

SASAC's Li yesterday also said that of 190 listed firms held by China's central SOEs, 179 had completed or started share reforms by the end of last month.

He also said SASAC has established a "fairly standardized" supervision system for the investment of SOEs: If they want to invest in non-core businesses, they must get the commission's approval.

The annual investment of the central SOEs totals 1 trillion yuan (US$126.6 billion), 97.6 per cent of which is channelled to core business operations, he said.

(China Daily 12/20/2006 page1)

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