The China Petroleum and Chemical Corporation (Sinopec), a blue-chip firm with the second highest market capitalization on the Chinese mainland after the Bank of China, announced Monday it had joined the share reform scheme.

 

The petrochemical company's reform virtually completes the share reform process on the mainland, which began in April last year.

 

Sinopec's market value, which exceeds 420 billion yuan (US$52.5 billion), accounts for 10.9 percent of the total value of the Shanghai Stock Exchange and Shenzhen Stock Exchange.

 

Details of the company's scheme will be published on Aug. 28, 2006, together with its half-year report.

 

The market value of listed firms that have adopted the reform now represents more than 90 percent of the total of the two Chinese bourses.

 

The reform, also known as split share structure reform, is among measures the government has taken in the past year -- along with legislative reforms for listed firms and corporate governance reforms -- to revive the capital market and improve its financial security. Split share structure refers to the existence of both tradable shares and non-tradable shares owned by the state. To make shares tradable, listed companies have to offer additional shares or funds to private investors as compensation for potential losses in the value of their portfolios when the publicly-owned shares hit the market.

 

Analysts estimate that to make its shares tradable, Sinopec will probably offer 2.5-for-10 or 2.8-for-10 bonus shares to public investors as compensation.

 

Of the 86.7 billion shares in Sinopec, only 2.8 billion are tradable A-shares.

 

Last Friday, Sinopec shares closed at 6.14 yuan, 0.02 yuan higher than their opening price.

 

(Xinhua News Agency August 22, 2006)