Morning:
10°c
Some may have missed a Christmas Day announcement from the Chinese government's Assets Supervision and Administration Commission (ASAC). It was a reminder for the largest state-owned groups to do their duty and buy shares. These report to central government. They are expected to listen.
Ever since it first dipped its toe in the capitalist pool, China has been wrestling with the legacy of privatisation. State companies listing on the stock market typically arrived with 75% of their shares still in government hands. An overhang of that size is not easy to ignore, and markets fell every time there was a suggestion a few shares might
be unloaded.
A disposal scheme was devised which, after incentivisation, gained approval from investors. As it included an embargo on when disposals could start, everyone was happy. Well, they were until the credit crunch started to bite. The disposal scheme was dumped, selling discouraged and ASAC announced in September that state-owned enterprises would be supporting their listed offspring by buying in shares.
The market moved up a bit. Huijin, the bank holding company, bought a few shares, as did the parents of China Unicom, Cosco and Sinopec. But positive sentiment didn't last. As soon as investors saw the tiny amounts of shares being bought, they saw the whole idea as window-dressing.
And that was where things stood until the Christmas message. The government now wants to move forward. Groups will need to do more than just make encouraging noises this time. The impact on the market remains to be seen.
* Nothing seems to have dampened the enthusiasm for migrant workers returning home at Chinese New Year. Huge queues have formed at Shanghai's main railway station and temporary structures have been erected to provide shelter for the crowds. This year, however, many will be buying a one-way ticket.
* Much sadness as another Shanghai favourite closed its doors. Located in a beautiful old house in the grounds of the Rui Jin Guesthouse, Face restaurant and bar had been popular with locals and visitors alike for over 10 years. The building itself will be feeling very nervous. A protected building plaque doesn't mean much in Shanghai these days.
