The central government won't press ahead with plans to sell
state shares in domestically listed firms for the time being due to
a lack of an appropriate means to handle the issue, a top official
announced Tuesday.
Li Rongrong, director of the State-owned Assets
Supervision and Administration Commission. said Tuesday that
the sale of state-owned shares, which account for nearly two-thirds
of the total equities in more than 1,200 public companies, will not
go forward until the government finds a way to sell them that
protects the interests of both the state and public investors.
"The basic point of selling state-owned shares is to give equal
attention and protection to all investors," Li said during a
nationally televised press conference in Beijing yesterday
morning.
"I have received lots of suggestions on the issue myself, but I
do not think that we have found (a method) that is acceptable to
all."
Li did say the state-owned assets commission, a new government
body that was established in April and oversees state-owned
enterprises, will work to improve the profitability and corporate
governance of publicly traded companies.
"First we have to better manage state-owned companies, then we
will have a proper environment to handle the sales issue," Li
said.
While investors have been following the sale issue closely, Li's
announcement had little effect on the two stock markets on China's
mainland yesterday. The Shanghai stock market inched up 0.26
percent to close at 1,343.61, while the Shenzhen stock market rose
0.34 percent to 3,227.57.
"The problem cannot be put on hold forever and will be dealt
with one day but we still have no idea of what will happen then,"
said Zhang Qi, an analyst with Haitong Securities Co Ltd.
The government tried to sell state-owned shares in June 2001 to
shore up China's underfunded pension fund.
However, the sale sent share prices down nearly 30 percent in
three months, forcing the government to suspend the sale.
Li said apart from selling shares, state firms might transfer
ownership through mergers and acquisitions with non-state and
foreign firms.
Li announced that China Telecom and China Unicom will transfer
US$4.3 billion worth of state-owned assets into listed companies by
the end of 2003.
China Telecom will inject the assets of its six provincial
companies, valued at 33.2 billion yuan, in terms of net assets,
into a newly established corporation exclusively owned by the
state, and further transfer the assets into a listed company, in
terms of net assets, Li said.
Similarly, China Unicom will first inject the assets from nine
provincial companies into a state-owned corporation. The assets
will eventually be sold to its British Virgin Island-registered
company and overseas listed arm. The assets are valued at 2 billion
yuan.
"I have received some complaints that the state assets were sold
at too low a price. So what we want to do is to put these deals on
a better regulated footing to ensure transparency, fairness and
openness," he said.
Li also said the government will not set a minimum price for
selling state-owned assets to foreign investors.
"We have no such rules," he said, adding any sale price would be
set by the market.
(Shanghai Daily November 12, 2003)