China’s state firms must be careful when investing in the property, stock and futures markets, and should aim for more efficient use of their capital, according to the State-owned Assets Supervision and Administration Commission.
It urged the country’s more than 130 state firms to focus more on the quality of their growth instead of purely size on market share.
The commission’s deputy chairman Huang Shuhe was quoted as saying by the state radio, state firms must be prudent in their operations and resist short-term temptations,
He warned, "They need to be especially careful when investing in high-risk areas such as stocks, real estate and futures."
It was stated firms must step up risk checks if they have already entered these markets. In the wake of the global financial crisis some Chinese firms embarked upon excessive capacity expansion or blind acquisitions and provided only low returns on investment, state radio reported.
Among the biggest Chinese state firms are metals conglomerate Chinalco, which made a big splash by becoming the top shareholder in Rio Tinto in February 2008.
But since then Rio’s shares have fallen by almost half and the value of Chinalco’s stake, initially worth $14 billion, has plunged.
Alibaba reported that SASAC has also chided state firms for exceeding their authority by dabbling in commodity derivatives. It has blamed investment banks including Goldman Sachs, Citigroup, Merrill Lynch and Morgan Stanley for providing "extremely complicated" derivatives products which caused net losses of $1.67 billion at 68 firms.