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| State-share Reform Enters Final Phase |
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More than 80 percent of Chinese firms listed domestically -- a total of 1,092 -- have completed or are in the process of state-shareholding reform as 35 more firms announced plans on Monday to float shares previously barred from trading on the stock markets. About 1,370 firms are listed domestically and the 1,092 firms account for 3.45 trillion yuan (US$430.7 billion) in market value, or 81.25 percent of the total. That figure indicates the country's one-year long state-shareholding reform is drawing to an end as less than 20 percent of the listed firms have yet to join reform. The reform, also known as split share structure reform, plus legislative reforms for listed firms and corporate governance, are among the measures the government has taken in the past year to revive the capital market to improve its financial security. The split share structure refers to the existence of both tradable shares and non-tradable shares owned by the state. To make all their shares tradable, listed companies undergoing reform have to offer additional shares or funds to private investors as compensation for potential losses in the value of their portfolios when the publicly-owned shares hit the market. The reform has been viewed by the regulator and investors as vital for the capital market to function as an open and fair market for both majority and minority public shareholders. After four years of bearish activity, the Chinese stock market rebounded by nearly 70 percent with improved investor confidence over the past 12 months, when the major index slumped to an eight year-low thanks to the sweeping share reform and other institutional changes. The composite stock index on the Shanghai Stock Exchange, closed at 1,697 points on Monday from 998 points in June last year, an eight-year low. In addition, Cao Bing, president of Datang Telecom Technology Co., said the reform had enabled both majority and minority stockholders to have a shared interest in improving corporate governance. The majority stockholder of Datang, which is listed on the Shanghai exchange and completed its share reform earlier this year, was as interested as the minority stockholders in the price fluctuations of their shares in sharp contrast to the past, said the president. Chinese majority stockholders used to pay little attention to the price fluctuations as their shares were not tradable. (Xinhua News Agency July 4, 2006) |
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