Agence France Presse

Beijing, June 20:

China has selected another 42 companies, including some of the country’s biggest blue chip names, to take part in the second phase of a pilot programme for the sale of state-owned shares, state media said on Monday. The second batch given the green light to float non-tradable shares includes China’s biggest steel company Baosteel, hydroelectric giant China Yangtze Power and oil company Sinochem International, Xinhua news agency reported. The move is part of an experiment to reform and bolster the country’s ailing stockmarkets which was first put forward by the China Securities Regulatory Commission (CSRC) in April. In the initial stage, four relatively small companies were selected, sparking concern that larger companies would be off limits. Under the programme, non-tradable shares are listed and the state’s holdings that make up around two-thirds of the stockmarkets over $400 billion in market capitalisation are gradually reduced.

The reform plan is designed to deal with this overhang of non-tradable shares, most of which are state-owned, which has dogged the market for years. While none of the 42 companies has yet revealed details of their flotation plans, analysts said the stature of companies on the new list was encouraging. “It’s proof that the government has very strong intentions to move on with the reform of the capital markets, for example, by including BaoSteel and big electronic companies,” said Mandy Wang, general manager of China International Fund Management Co (CIFM), a JP Morgan joint venture. “We believe this shows the reform intentions of the government. “We think the trend of considering existing non-state shareholders is here to stay,” she added.