CSRC Dismisses Rumours of State Share Sale

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Last updated at: (Beijing Time) Friday, January 11, 2002

CSRC Dismisses Rumours of State Share Sale

Stock market watchdog China Securities Regulatory Commission (CSRC) dismissed rumours on Thursday about the resumption of State stake sales, warning investors against market talk.

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Stock market watchdog China Securities Regulatory Commission (CSRC) dismissed rumours on Thursday about the resumption of State stake sales, warning investors against market talk.

"We haven't heard anything about that yet," said a CSRC official, stressing a cautious attitude towards market rumours.

Unconfirmed reports said sales of massive State-held shares in listed companies would be resumed as early as April.

It was rumoured that while details were still to be hammered out later, the new plan's principles had been decided and centred on having a far more market-depressing impact than its predecessor which was suspended last October.

Insiders said a decision on the plan and its implementation would be up to the State Council because of its significance to the economy and potential impact on the stock market.

While nobody could convincingly confirm or refute the reports, analysts mostly doubt the workability of the principles of the alleged new sale programme.

And they said the timing was not right as they saw no end to the market slowdown by April.

Under the suspended scheme, listed companies were required to sell their State shares equivalent to 10 per cent of the proceeds from new share offerings and at the market price.

Investors disliked this and share prices nosedived, forcing the authorities to call off the scheme designed to raise cash for a social security fund.

The rumours say the new programme would feature a "higher price," a higher cut than 10 per cent and that untradeable shares held by institutions would follow suit.

"It was not workable to price the State shares above the market price, if that's what is meant by a 'higher price,' given the enormous magnitude of the sale," said Wang Yuanhong, senior researcher with the State Information Centre.

"At least there should be complementary measures to offset the impact," said Yan Bin, an analyst with Beijing Securities.

Wang said the pace of the sale was of less significance, if the price was acceptable. Many favoured a price equivalent to net assets per share.

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