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State-owned shares transfer to have a far-reaching influence on China's capital market |
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16:58, June 22, 2009 |
Experts warn not to exaggerate positive role of state-owned shares transfer in stock market
Policy on state-owned shares transfer involves:
131 listed companies
About 8.394 billion shares pending transfer
Initial market capitalization of around 63.933 billion yuan
Current market capitalization of 83.55 billion yuan
China's state-owned shares transfer policy, announced on June 19, not only represents a preparation for an older age society in the future and a significant step in improving social security systems, but also a far-reaching influence on the long-term development of China's capital market, according to experts and securities industry insiders.
Professor Hua Sheng, president of Yanjing Overseas Chinese University, believes that the approach of transferring 10 percent of state-owned shares from listed companies into the National Social Security Fund (NSSF, SSF) is in line with the concept of enlarging the SSF and helping more people enjoy the achievements of reform and opening-up. It is on the right track.
In the long run, this rule still needs more detail and improvement, he added.
Zhao Xijun, deputy dean of the School of Finance at Renmin University of China, said transferring state-owned shares into the SSF will inject more funds into the social security capital system and further improve the construction of China's social security system.
"Moving from reducing state-owned shares to transferring them into the SSF, it is of great significance to the stock market," said Hu Yunchao, associate professor from China Executive Leadership Academy Pudong.
In the short run, and as far as the relationship between market supply and demand is concerned, the move has locked up a portion of stated-owned shares and alleviated the pressure caused by sale of non-tradable shares. This may somewhat stabilize the market.
In addition, the SSF puts more emphasis on long-term income, rather than short-term profit when compared to mutual funds. It also has no pressure from short-term assessment; therefore, it is more stable. In the medium to long term, shareholders like the SSF are also good for listed companies.
Xie Xuecheng, deputy general-manager of Southwest Securities Research and Development Center, said that Chinese A shares will face a boom of unlocking sale-restricted shares in 2010. The lock-up period of stated-owned shares transferred to the SSF in this time will be extended by another three years, which will play an active role in the capital market. Some market watchers said that the extended lock-up period will not only boost investor confidence, but will also turn the SSF into the mainstay of the A-share market.
Dongxing Securities researcher Yin Guohong believes that the state-owned shares transferred to the SSF may gradually be reduced in the long run. However, this policy has clarified that the shares will not be sold in the short run, and has set the upper limit of shares that will be sold, thus balancing the market predictions further.
From the point view of capital market participants, after the transfer, the SSF will become a major institutional player in the market, which will play an even larger role in the long-term healthy development of China's capital market.
At the end of April 30 this year, the SSF was listed as top 10 shareholders in 60 A-share listed companies, holding a total market capitalization of more than 4 billion yuan. It was very clear that SSF has increased its investment in stock markets in the first quarter, showing its positive role in the process of China's stock market rally in 2009.
The implementation measures of this policy stipulate that after the transfer of state-owned shares, the SSF will only enjoy the right to profit and disposition of shares transferred, and will not interfere with the daily operations and management of relevant listed companies.
However, Xie noted that the SSF will be able to guide mainstream investment in stock markets by holding blue chips in the long term, while lowering its investment in other stocks, thus contributing to sound investment philosophies in China's capital market.
By People's Daily Online
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