Merger plan to boost SOE reforms in Shanghai ( 2003-11-21 10:09) (Shanghai Daily)
Shanghai government is trying to create a blockbuster equity exchange by
merging three major local institutions engaged in equity and technology stock
transfer operations.
Initiated by the Shanghai State-owned Assets Supervision and Administration
Commission, the move is expected to help create an effective platform to further
facilitate Shanghai's reform of State-owned enterprise (SOE) ownership; and also
as a signal encouraging the inflow of domestic private and foreign investors
into the local equity market before it evolves into a national-level equity
transfer exchange.
Local authorities are revising the city's equity transaction administrative
regulation, enacted in 1998, to provide a sound legal framework for future
activities of the new establishment.
"The merger is currently under way, and the new exchange will take shape very
soon," said Zhang Hailong, president of the Shanghai Assets and Equity Exchange
(SAEE), a public institution set up in 1996.
Sources from the Shanghai Equity Transaction Administration Office described
the merger - involving SAEE, Shanghai Technology Stock Exchange (STSE) and
Shanghai Technical Transfer Exchange (STTE) - as "unprecedented", although some
cities like Wuhan of Hubei Province and Beijing are also planning similar
mergers.
SAEE and STSE, the latter set up in 1999 as a corporate entity, are the two
major local organizations handling corporate equity transactions, while STTE is
mainly engaged in technology-involved transfer activities with a
relatively-marginal operation scale.
Statistics from SAEE indicate equity transfer deals worth some 108 billion
yuan (US$13 billion) were sealed last year, and the figure is expected to soar
to about 150 billion yuan (US$18 billion) this year.
At STSE, the transaction volume this year will amount to about 120 billion
yuan (US$14.5 billion), compared with 22 billion yuan (US$2.7 billion) in 2000.
SAEE claimed that transactions involving State holdings of SOEs account for
about 80 per cent of its total equity transfer volume, and for STSE, the
proportion is around 30 per cent.
"The new exchange represents the right way ahead as it will provide a unified
and standardized market with the collaborative - instead of separate - strengths
of all the involved parties," said Wang Qing, an official at SAEE's information
centre.
