Tuesday, October 16, 2007

Listing Decisions, Chinese Style

From today's Hong Kong Standard:

The Chinese government will support state- owned enterprises to list shares in Hong Kong, contrary to reports that there are directives to limit public floats overseas, the head of the State- owned Assets Supervision and Administration Commission (SASAC) said yesterday.

SASAC chairman Li Rongrong said it was not up to the agency to determine on which market SOEs should list - rather, it is the boards of companies that make those decisions.

More here.


Now the companies are state-owned enterprises (SOEs), though they have already gone through a corporatization process. I probably can safely assume that the government holds controlling stake in these companies.

If true, presumably I can safely assume that government representatives dominate the boards of these companies. If so, then we have a situation where government officials, as resprenstatives of the state's interests, will determine where government-owned enterprises will list. Do you really believe that they will make that decision based on economic criteria and not on political ones.

If not, what's the difference between delegating the authority to make a listing decision to the board of the SOEs and having it made by your colleagues, Mr Li?

1 comment:

Kempton said...

I am making the numbers up.

But say by taking this one extra step, it will manage to confuse 20% of the people (those who don't care to dig a little deeper or look a little further) that these Chinese listed SOE actually act like foreign civilized companies which are governed by their board of directors. Why not?

As an aside, that is why the HK Chief Executive was "elected" by 800 people. The fact that majority of those 800 were sock puppets don't reduce the enjoyment of the Chinese and HK officials in calling the HK CE "election" -- an "election".