Sumitomo has just done a deal which looks very significant. The Japanese trading house has reached agreement to buy a large block of non-tradeable shares in a listed state-owned pharmaceutical company. The terms are that it has to abide by a three-year lock-up period, the implication of which is they are free to sell on the 3years+1 day. Guaranteed exit at a known future date. Pretty good.
The FT’s report also indicates Sumitomo also got the seller to agree to US transactional legal terms. Which presumably means that if material differences or issues emerge after the close, Sumitomo has a means of getting restitution.
For the Chinese company and for the stock market of course, it is a huge win, because it opens a mechanism for offloading large amounts of non-tradeable shares onto foreign investors. Which will help deal with the overhang and keep the Chinese markets marching upwards towards some degree of equivalence with the Chinese economy.
Chinese shares, bought selectively, are a buy.