At this writing, conversion plans by 45 of the 46 companies involved in the trial stages float their shares have been approved by shareholders, and more than half of China's publicly traded companies have created preliminary stock conversion plans, the Shanghai Securities News reported.
Compensation to shareholders whose interests could be devalued by an increased share supply are also part of the conversion plans as large listed companies such as Baosteel promised to cover losses. Speculation over the compensation plans set off rallies in the Shanghai and Shenzhen stock markets in mid-July. Shanghai's composite index rose from its 12-month low of 1007.9 on July 12th above 1203 in mid-September.
As part of its stock market reforms, China also established a US$779 million fund to protect investors who have accounts in bankrupt securities companies, following a string of Chinese brokerage scandals over recent months.
Meanwhile, Beijing followed through on its July announcement that the cap on overseas institutional investments in China would increase from US$4 to US$10 billion and began allocating US$6 billion worth of qualified foreign institutional investor (QFII) quotas to foreign banks and fund managers. Hong Kong-based Hang Seng Bank said its investment threshold had been doubled to US$100 million in September.
Further JVs permitted
New rules allowed offshore futures brokerages registered in Hong Kong and Macau to establish Mainland futures companies' joint ventures in which the overseas partners can hold a stake of up to 49%, which is higher than the 33% cap for securities joint ventures, the China Securities Regulatory Commission announced. According to the guidelines, overseas applicants will have to spend at least US$6.2 million for share-holder equity and must have posted profits for the previous two years.
China Securities to receive bailout
China Securities will receive a US$568 million capital injection under a new bailout plan, The South China Morning Post reported. The restructuring of China Securities will enable Citic Securities, the larger of two mainland-listed securities houses, to expand its business. Under the deal, Citic Securities agreed to set up an investment company with China Jianyin Investment, the wholly state-owned firm born out of last year's split of China Construction Bank. The new entity will inherit the entire securities business and related assets of China Securities, according to a Citic Securities.
PetroChina sells 3.16bn H shares
PetroChina Co, China's biggest oil company, sold 3.16 billion Hong Kong shares at HK$6 apiece – the top end of its range – and will continue offering its shares on the New York Stock Exchange, the Standard of Hong Kong reported. PetroChina and its parent could raise up to US$2.7 billion as the company seeks to increase cash reserves to go after increasingly high-priced oil supplies.
BoC chooses bankers
Citing "close long-term association", Bank of China announced its multi-billion-dollar IPO would be handled by Goldman Sachs, UBS and Bank of China International, BoC's investment banking arm. The decision comes as a blow to Merrill Lynch, which announced earlier plans to participate in a consortium that would buy a 10% stake in the Chinese lender for US$3.1 billion.
New laws to boost confidence
China's securities regulator will have the power to freeze corporate or individual bank accounts under new measures being considered by China's legislature, state media reported. Intended to root out corruption and boost confidence in the markets, the draft revision of the Securities Law permits the regulator to take such action provided the head of the commission gives approval.
Property developer plans IPO
Agile Holdings is set to become the second mainland property developer to go public with an initial public offering of US$193 million planned before the end of the year, the South China Morning Post reported. The company's interests include property development, property management and hotel management with seven residential projects in Zhongshan and four in Guangzhou.
Baosteel holders vote in share reform
Baoshan Iron & Steel Co shareholders approved a plan to increase the number of publicly traded shares, the Wall Street Journal reported, citing sources at a shareholders meeting. In a separate development, China Yangtze Power Co, one of China's largest power producers, received permission to oat more of its previously non-tradable state shares. The companies? decision to eliminate large, state-owned non-tradable shares should encourage others to follow suit.
Rules to regulate money brokers
China's banking regulator issued new rules that will cover the country's first money brokers when they start operations. The China Banking Regulatory Commission said the rules posted on its website are effective Sept 1, but it didn't say when the first brokers will be allowed to begin operations. The regulator said the first money brokers, which will operate under a pilot program, can be joint ventures between local and foreign companies. Such ventures would help Chinese firms learn from international experience, it said.