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27-07-2014, 10:58 PM
Assets of Chinese SOEs rise
THE AUSTRALIAN JULY 28, 2014 12:00AM
Scott Murdoch
China Correspondent
Beijing
GLOBAL investors with an eye on high returns are waiting for the Chinese government to fulfil its promise to implement major reforms of the nation’s state-owned enterprises to make the businesses more profitable and less prone to corruption.
The regulator, the State-Owned Assets Supervision and Administration Commission of the State Council, revealed on the weekend that 113 state-backed enterprises now had combined assets worth 35 trillion yuan ($67 trillion) at the end of last year, up 11.7 per cent on one year earlier.
The businesses recorded 24.4 trillion yuan in operating revenue, up 9. 1 per cent, while profits increased 3.6 per cent to 1.3 trillion.
SOEs have been criticised by investors in the past for poor management and relatively low levels of profitability compared with their private sector rivals.
The Chinese government earlier this year outlined a plan to manage SOEs more effectively and cut the level of corruption that had become evident among some top ranking management.
It also plans to turn some SOEs to become capital investment companies and has launched a trial program at State Development & Investment Corporation and China National Cereals, Oils and Foodstuffs Corporation.
Under the scheme, they will become effective sovereign wealth funds similar to Singapore’s Temasek Holdings.
SASAC has also appointed China National Building Material Group Corporation and China National Pharmaceutical Group Corporation (Sinopharm) to take on hybrid ownership structures.
Nomura’s head of China Research Wendy Liu said investors were not overly concerned about some SOEs that were listing or due to float retaining a high government ownership.
“I think if there is a way to figure out how to run these entities systematically investors are interested in them because they are looking at returns,” Ms Liu told The Australian in Hong Kong. “They need to make sure the system works.
“It is more about identifying reputable companies to provide systematic and sustainable returns. I think Beijing is clearly in that process of trying to identifying the solutions.”
Rating agency Fitch says reforms ordered by the Chinese government could make the SOEs more profitable and transparent.
“Reform is also more likely for SOEs in market-oriented sectors,” it said.
THE AUSTRALIAN JULY 28, 2014 12:00AM
Scott Murdoch
China Correspondent
Beijing
GLOBAL investors with an eye on high returns are waiting for the Chinese government to fulfil its promise to implement major reforms of the nation’s state-owned enterprises to make the businesses more profitable and less prone to corruption.
The regulator, the State-Owned Assets Supervision and Administration Commission of the State Council, revealed on the weekend that 113 state-backed enterprises now had combined assets worth 35 trillion yuan ($67 trillion) at the end of last year, up 11.7 per cent on one year earlier.
The businesses recorded 24.4 trillion yuan in operating revenue, up 9. 1 per cent, while profits increased 3.6 per cent to 1.3 trillion.
SOEs have been criticised by investors in the past for poor management and relatively low levels of profitability compared with their private sector rivals.
The Chinese government earlier this year outlined a plan to manage SOEs more effectively and cut the level of corruption that had become evident among some top ranking management.
It also plans to turn some SOEs to become capital investment companies and has launched a trial program at State Development & Investment Corporation and China National Cereals, Oils and Foodstuffs Corporation.
Under the scheme, they will become effective sovereign wealth funds similar to Singapore’s Temasek Holdings.
SASAC has also appointed China National Building Material Group Corporation and China National Pharmaceutical Group Corporation (Sinopharm) to take on hybrid ownership structures.
Nomura’s head of China Research Wendy Liu said investors were not overly concerned about some SOEs that were listing or due to float retaining a high government ownership.
“I think if there is a way to figure out how to run these entities systematically investors are interested in them because they are looking at returns,” Ms Liu told The Australian in Hong Kong. “They need to make sure the system works.
“It is more about identifying reputable companies to provide systematic and sustainable returns. I think Beijing is clearly in that process of trying to identifying the solutions.”
Rating agency Fitch says reforms ordered by the Chinese government could make the SOEs more profitable and transparent.
“Reform is also more likely for SOEs in market-oriented sectors,” it said.