YICAI｜SOE Stocks Surge as China Pushes for Higher Market Values

(Yicai) Dec. 18 -- Shares of Chinese state-owned enterprises surged after the state asset manager announced new guidelines aimed at improving corporate development and market valuations.

Several central enterprise-controlled companies hit their daily upper price limits today. For example, CSCEC Scimee Sci.&Tech [SHE: 300425], a water treatment company under China State Construction Engineering Corp., soared by 20 percent to CNY6.43 (US 90 cents).

Additionally, Shenyang Chemical [SHE:000698], a unit of China National Chemical Corp., rose 10 percent to CNY4.03 and Sinoma Energy Conservation [SHA:603126], backed by China National Building Material Group, jumped by 10 percent to CNY6.78.

Central enterprises should actively pursue mergers and acquisitions to enhance listed companies' investment value, intensify market-oriented reforms, improve the quality of information disclosure, and proactively strengthen investor relations management to stabilize return expectations, per a document that the State-owned Assets Supervision and Administration Commission of the State Council published yesterday.

The guidelines further clarified the government's objectives. This year, Chinese regulators have repeatedly emphasized market value management for listed companies, including incorporating valuations into executives' performance evaluations.

The government agency encourages central enterprises to guide their listed subsidiaries in developing reasonable and sustainable profit distribution policies, enhance the stability, continuity, and predictability of cash dividends, and hike the frequency and proportion of such earnings distributions.

Central enterprises and their listed subsidiaries should establish routine stock purchase and repurchase mechanisms, prepare plans to respond to short-term slumps in share prices, stabilize market sentiment in a timely manner, and maintain the market value of listed units, it added.

Central enterprises refer to companies directly supervised by the SASAC. China has 98 such firms controlling about 400 companies listed on the mainland.

https://www.yicaiglobal.com/news/chinese-soes-jump-after-state-asset-manager-underscores-valuations