Asset restructuring could activate the slumping stock market in China, according to officials of the China Securities Regulatory Commission (CSRC).
Ma Xianfeng, an official with the securities watchdog, said the CSRC is considering introducing new measures to encourage and regulate asset restructuring of domestic-listed firms.
Speaking at a seminar on asset restructuring on November 3, Ma pointed out that asset restructuring is a major way to improve the corporate structure of listed State-owned enterprises (SOEs).
Most listed firms in China are SOEs, but in recent years, an increasing number of private companies have sought financing by going public.
Merging with a listed SOE is a main mode of asset restructuring for a majority of Chinese private enterprises.
While this method attracts more capital and increases efficiency, it often harms the interests of smaller investors, Ma said at the seminar.
The official revealed that the proposed measures to administer asset restructuring would abide by market principles and benefit the interests of small and medium shareholders.
Ma's remarks came after the regulatory commission suspended a plan to reduce State shares - which account for 70 per cent of listed firms but cannot be traded - late last month. The plan stipulates that SOEs must sell an additional 10 per cent of their State shares at the price of their tradable stocks when they go public.
Concerned that State shares would flood into the market, investors rushed to sell their stocks, causing the market price to dive. Experts at the seminar said improved asset restructuring can help reduce State shares without destabilizing the market.
Wu Xiaoqiu, director of Renmin University of China's Finance and Securities Institute, also stressed the importance of asset restructuring in the stock market.
"But false information releases are flooding in current restructuring, and new regulations should be issued to ensure a transparent market," Wu said at the seminar jointly sponsored by Renmin University of China and Beijing Shuangjunyuan Investment Management Co.
He also suggested that before any measures to reduce State shares are released, opinions from experts, scholars and small and middle investors should be heard.
(China Daily November 6, 2001)
