BIZCHINA / Pilot
Power firm completes list of reformers
By Chen Hua and Zheng Lifei (China Daily)
Updated: 2005-11-22 13:54
A Shenzhen-listed power company yesterday received the go-ahead from its
shareholders to convert its non-tradable State shares to ordinary ones.
All 50 companies on Shenzhen's SME (small and medium-sized enterprises)
board have now finalized this reform process.
A majority of shareholders of Guizhou Qianyuan Power Co Ltd, based in
Southwest China's Guizhou Province, yesterday approved the company's
share reform plan.
This improves the compensation to holders of tradable shares from 2.8 new
shares for every 10 already held to 3.2 shares for every 10.
Analysts and experts say the completion of the reform on the Shenzhen SME
board provides good conditions for the launch of a new stock index that
takes into account the changes.
"With all listed companies (on the SME board) completing their A-share
merger reform, the conditions can only become more favourable to
introducing a SME board index," said Li Yan, a research fellow at
Tsinghua University's Research Centre for China's Financial Studies.
A SME board index launched now, she said, would reflect the firms' market
performance more accurately than before the reform process.
The market has long expected the launch of such an index.
An official from Shenzhen Stock Exchange yesterday declined to comment on
the issue.
But he told China Daily that his exchange would hold a press conference
next week during which it will inform the public about the latest
developments on the much-anticipated index.
The 50 SME-listed companies on average offered their tradable
shareholders 3.38 shares for each 10 held, about 5 per cent higher than
the compensation from companies on the main board.
In China two-thirds of listed companies' A shares held by the State or
other legal bodies were non-tradable, with only the remaining one third
held by public investors.
The split share structure is often blamed for distorted stock prices over
the last four years.
To float non-tradable shares, the State shareholders first needed to
offer shares or cash compensation to tradable shareholders.
China kicked off this A-share reform, involving shares traded in renminbi
on China's two stock exchanges in Shanghai and Shenzhen, in April.
Yesterday, another 17 companies joined the process, bringing to 270 the
number of companies that have completed or announced they would join the
reform scheme.
They account for almost 20 per cent of China's 1,400-plus A-share listed
companies.
Of the 17 companies joining the scheme yesterday, four also sell
B-shares, which are foreign-currency traded shares on mainland markets.
And 13 of the 17 companies are State-owned enterprises (SOEs), a fact
that analysts said was a sign that SOEs were speeding up the floatation
process.
The benchmark Shanghai composite index, which gained 2 per cent last
Friday, remained almost flat yesterday, closing 0.26 per cent higher at
1,119.936 points.
"Tepid market sentiment is within expectations," said analyst Liu Haobo,
with Beijing-based CITIC Securities.
"The publication of the list (of the plans of the 17 companies) is well
within the market's expectation and offers nothing fresh to lift
sentiment," he said.
The market, the CITIC analyst said, was likely to adopt a wait-and-see
attitude in coming days, watching closely for new measures taken by
regulators.
If there are no "new and bold" policy incentives from the regulator, Liu
said, market sentiment is unlikely to lift much.
In another development, the Bank of Communications, which was listed in
Hong Kong in June, was reportedly planning to reveal its management
incentive mechanism.
The incentive was reported to be as high as 800,000 HK dollars
(US$103,225) each year for a manager or board director at the bank.
(For more biz stories, please visit Industry Updates)
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