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China published a namelist of 19 domestically listed firms as the 12th batch of firms for the ongoing share reform, indicating the country's share reform to revamp the stock market makes headway.
The newcomers bring the total number of listed firms to 321 that have undergone the reform or are beginning the reform, nearly accounting for one quarter of the country's 1,381 domestically listed companies.
The reform was launched by the Chinese Government on April 29 this year to float the non-tradable shares, which account for two thirds of the total and mostly State-owned.
According to the institutional arrangements China made in early 1990s to set up its stock markets, two thirds of the shares of listed State-owned firms can not be traded on the market, which are also known as non-tradable shares.
The arrangement, which was designed at a time the State-owned sector dominates the national economy to prevent the loss of control over State assets, has been described as split share structure.
The split share structure has been blamed as the key culprit for China's stagnant stock market, and the reform has been described as the "most significant" event in the country after the nation set up its stock market in the 1990s.
According to the reform offers made public, the companies or major shareholders, through consultations among stockholders, should compensate about three shares per 10 shares to tradable shareholders so as to make all their shares tradable.
It has been reported that China plans to complete the reform by the end of next year, but the reform suffered a setback recently.
The confidence of market participants has eroded by falling compensation offers by major stockholders or listed firms to minority stock holders and the depressed markets.
Fearing failure of the reform, the Chinese Government decided at a national meeting early November to advance the reform while maintaining market stability, the basic policy regarding the reform and the confidence of market participants.
Following the meeting, local securities authorities, such as those of Beijing and Shenzhen, responded to the central government decisions by publishing their own timetables for share reform.
The securities watchdog of the Beijing municipal government ordered listed firms in Beijing that are under jurisdiction of the local government to work out their reform proposals before the end of this month so that the reforms will be basically completed before next March.
The reform is part of the efforts made by China to invigorate the securities market so that it will make due contribution to the fast and sustainable development of the national economy.
Among the measures China has taken in that regard, China's top legislature has amended its Corporate Laws and Securities Laws, and the Chinese Government has moved to improve the corporate governance of its listed firms.
China also increased the quotas for qualified foreign institutional investors by US$6 billion to encourage development of institutional investors.
Shang Fulin, chairman of China Securities Regulatory Commission (CSRC), said China's capital market faces breakthrough in development thanks to the institutional reforms and fast development of the national economy.
Shen Xiaoping, deputy general manager of Beijing Securities Research Center, said a major turnaround is expected on the Chinese securities market as a result of a package of policy changes despite the current lackluster market performance.
(Xinhua News Agency December 6, 2005)
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