The reform of state-owned enterprises into shareholding
companies should continue, the Shanghai Stock Exchange said in a
report yesterday.
The report also encouraged SOEs to seek group listings that can
reduce operational costs and raise efficiency.
"Group listings help to standardize the management of SOEs as a
whole and thus may improve their overall performance," said the
report. "Also, it reduces the number of related transactions,
cutting costs and raising efficiency."
Converting SOEs into shareholding companies is a key step in
seeking a group listing.
By the end of October, there were 279 SOEs trading shares of
branch companies on the nation's two bourses.
The market value of the listed arms of these 279 enterprises
amounted to more than 4 trillion yuan (US$547.9 billion), making up
one quarter of the nation's total stock market capitalization.
"To some extent, the potential of these companies decides the
quality of China's capital market and its ability to sustain," said
the report.
In November, Li Wei, vice director of China's State-owned Assets
Supervision and Administration Commission, said China encourages
qualified state-owned enterprises to conduct group listings under
proper occasions.
"It is not that all SOEs must be group listed. It should be
based on their core businesses and performance. A better way is to
conduct listings sector by sector," said Li.
Once SOEs are transformed into shareholding firms and issue
shares, the listed arm of SOEs can also buy into their parent
company and realize a group listing.
Still, companies must be aware that the assets poured into the
listed companies should be operational assets and group listings
should not lower the quality of the listed firm, said the
report.
(Shanghai Daily January 4, 2008)
