Lehman, Lee & Xu - China Capital Markets in the news

The China Law News keeps you on top of business, economic and political events in the China.
Blawg | Newsletter Archive | |

In the News

China Citic Bank Corp Ltd Sets Terms for $74 Million IPO-Renaissance Capital

Renaissance Capital reported that China Citic Bank Corp Ltd announced terms for its IPO. The Company plans to raise $74 million by offering 7.0 million shares at a price range of $9.50 to $11.50. At the midpoint of the proposed range, Sungy Mobile would command a fully diluted market value of $365 million. 


China Pledges Bigger Market Role While Keeping State Dominance

Nov. 13 (Bloomberg) -- China elevated the role of markets while maintaining the state’s dominance in the nation’s economic strategy, seeking to balance finding new sources of growth with sustaining the Communist Party’s grip on power.

The nation will make markets “decisive” in allocating resources, according to yesterday’s communiqué from the third full meeting, or plenum, of the party’s 18th Central Committeein Beijing, which stopped short of unveiling detailed policy shifts. The state will remain “dominant” in the economy, indicating limits on reducing government involvement.

The statement from the President Xi Jinping-led session suggests freer pricing on interest rates, farmland and energy without changing the central role of state-owned enterprises, according to Bank of America Corp. China will set up a party panel to coordinate and supervise policies under the updated principles and more specific measures may follow in the coming weeks or months.

“It remains to be seen whether actions are as loud as words,” Kevin Lai, an economist at Daiwa Capital Markets in Hong Kong, said in a note. “There will be reforms but they will not go far enough to break many old state-owned entity interests.”

Stocks Drop

The benchmark Shanghai Composite Index fell 1 percent at 10:23 a.m. local time and Hong Kong’s Hang Seng Index was down 1.1 percent, as the statement disappointed investors looking for specifics on policy shifts to combat cooling growth in the world’s second-largest economy. Hao Hong, a Hong Kong-based strategist at Bocom International Holdings Co., said yesterday that the meeting “underwhelms in details.”

China’s leaders are under pressure to revamp the nation’s finances as swelling local-government debt highlights the risk of a buildup of bad loans and state businesses’ access to bank funding crowds out small firms. The document didn’t discuss specific issues such as regional borrowing, interest rates or the one-child policy, while referring generally to giving farmers more property rights.

“It’s going in the right direction is the most you can say,” said Louis Kuijs, chief China economist at Royal Bank of Scotland Group Plc in Hong Kong. “Even though some of the phrasing is new, the ideas are not so new.”

The communiqué, published by the official Xinhua News Agency, reiterated the role of state ownership while saying development of the non-public sector will be “encouraged.” That emphasis “probably precludes drastic state-owned enterprise-related reforms,” said Kuijs, who previously worked for the World Bank in China.

‘Reform’ Count

The 5,000-character statement referred to “reform” 59 times, “development” 37 times and “socialism” 28 times. It used the word “finance” just once.

Last year’s combined revenue of about 120 companies under the State-owned Assets Supervision and Administration Commission was equivalent to 43 percent of gross domestic product. Companies overseen by the commission include China National Petroleum Corp., the country’s largest oil producer, and China Mobile CommunicationsCorp., parent of the world’s largest phone company by users.

Stephen Green, head of Greater China research at Standard Chartered Plc in Hong Kong, said that the reference to a “decisive” market role “may sound small, but it should provide critical air-cover to detailed reforms which support the market.”

Limited Prospects

Chang Jian, a Hong Kong-based economist at Barclays Plc, said the statement indicated limited prospects for SOE reform. She saw the likelihood of “meaningful progress” in areas such as the fiscal relationship between central and local government; social security; and the legal system. “Some initial progress” may occur in land reform, she said.


Edward Lehman雷曼法学博士
Managing Director 董事长

LEHMAN, LEE & XU China Lawyers

LEHMAN, LEE & XU is a top-tier Chinese law firm specializing in corporate, commercial, intellectual property, and labor and employment matters. For further information on any issue discussed in this edition of China Capital Markets In The News or for all other enquiries, please e-mail us at mail@lehmanlaw.com or visit our website at www.lehmanlaw.com.

© LEHMAN, LEE & XU 2013.
This document has been created for educational purposes for clients, potential clients and referrers of services to , and to alert readers to the services provided by . It is not intended to serve as definitive professional or legal advice, and should not be relied upon as such. does not endorse any personal opinions which may be contained herein.
LehmanBrown© International Accountants
For more information regarding accounting, taxation, and audit services in China please email LehmanBrown International Accountants at mail@lehmanbrowninternational.com or visit our website at www.lehmanbrowninternational.com .
We hope that you enjoy China Life Science Law in the News . If you would like us to send you new issues by e-mail each month, please click here to subscribe. There is no charge for this service. If not, please click here to unsubscribe.