Cheng­tong buysMe­tal­lur­gi­cal Corp shares

China Daily (Canada) - - BUSINESS - By ZHONG­NAN zhong­nan@chi­

Met­al­lur­gi­cal Corp of China Ltd, the coun­try’s big­gest met­al­lur­gi­cal en­gi­neer­ing con­trac­tor, an­nounced on Wed­nes­day that 24.76 mil­lion of its non­pub­lic of­fer­ing shares were pur­chased by China Cheng­tong Hold­ings Group Ltd, a State-owned as­set-op­er­at­ing group.

The lock­down pe­riod for these shares will last for 12 months. MCC’s stock rose by the 10 per­cent daily trad­ing limit to close at 5.1 yuan (0.74 cent).

This is the first time that China Cheng­tong, which cur­rently hold­ing 350 bil­lion yuan of equity funds for fi­nanc­ing the re­struc­tur­ing of SOEs, put money into the coun­try’s A-share mar­ket.

“There is no doubt that SOE re­form will be­come a hot in­vest­ment theme in the stock mar­ket this year. Mixed ownership re­form, as­set-backed se­cu­ri­ti­za­tion and equity fi­nanc­ing are ex­pected to bring more cash into the stock mar­kets sooner or later,” said Du Chunbu, a pro­fes­sor of se­cu­rity trad­ing at Nankai Univer­sity in Tian­jin.

“This would be help­ful for a re­bound in the stock mar­ket... as in­vestors are op­ti­mistic about the on­go­ing SOE re­form,” said Du.

“How­ever, reg­u­la­tors and in­vestors must pay at­ten­tion to pre­vent ex­ces­sive spec­u­la­tion caused by com­pa­nies or in­di­vid­u­als with loads of hot­money.”

The State-owned As­sets Su­per­vi­sion and Ad­min­is­tra­tion Com­mis­sion an­nounced that China Cheng­tong and China Re­form Hold­ings Co Ltd were two fund man­agers that would pi­lot SOE re­forms set out by the cen­tral govern­ment last year.

The funds will be used to sup­port SOEs to up­grade their in­dus­trial lay­out, op­ti­mize cap­i­tal al­lo­ca­tion, merg­ers and re­or­ga­ni­za­tion, as well as pro­mote their overseas op­er­a­tions.

Nie Hui­hua, an eco­nomics pro­fes­sor at Ren­min Univer­sity of China in Bei­jing, said the cen­tral govern­ment’s re­forms aimed at ex­plor­ing new Sta­te­owned as­set man­age­ment mod­els fo­cus­ing on the man­age­ment of the cap­i­tal rather than the com­pa­nies.

There is no doubt that SOE re­form will be­come a hot in­vest­ment theme in the stock mar­ket this year.”

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