Swiss-based UBS, the world's largest asset manager, believes the time is ripe for China to further sell State-owned shares.

"We believe, having regard for the current market environment, now is an opportune time for such sell-downs to take place," said Nicole Yuen, head of China Equities at UBS Investment Bank, which was the first overseas financial institution approved to invest in China's market through the Qualified Foreign Institutional Investor scheme.

Yuen made the remark yesterday at UBS's fourth annual Greater China Conference in Shanghai, echoing the State Council's recent address on the sale of state-owned shares, which is widely regarded as a bottleneck in the development of the country's securities market.

The main reasons UBS supports state-owned share sales includes the continuously-rapid development of China's economy, the fairly good performances of some listed companies and the blooming global investment market.

Yuen suggested that China reinitiate the trial sale of some State-owned shares as soon as possible by sticking to the principle of market practices, noting that such a move will greatly benefit the country's securities market.

"Further sell-downs will provide an invaluable fillip to the opening up of the country's securities markets and remove a lot of the obstacles currently hindering pending market reforms," said Yuen.

In another development, UBS experts Monday raised the scheme of integrating China's two domestic exchanges with the Hong Kong Stock Exchange.

"As we have observed, international investors have begun, to a certain extent, regard A, B and H shares as a whole China-concept stock," said Yuen.

Given further opening of the market, a controlled flow of capital between the three markets would act as an effective safety valve and prevent any single market from overheating, according to Yuen.

But there is still a long way for the markets to achieve harmonious integration, Yuen said.

(China Daily February 17, 2004)