Private shareholders can bring extra discipline to the country’s 150,000 state-owned enterprises. CITIC and Sinopec have set the ball rolling. But for real efficiency, SOEs need to pay market rates for debt as well as equity. The key is to get on with half-finished bank reforms.
Family is a big part of destiny, even when opportunities are supposed to be equal. Since children tend to take after their parents, the elite tend to be self-perpetuating, and poor kids will tend to become poor adults. Still, there are ways to soften the injustices of birth.
The state-owned Chinese oil group is seeking investors for up to 30 pct of its petrol station arm. Though comparisons are tricky, multiples for other operators suggest a valuation of at least $50bln. A sale at that level could prompt a revaluation of the rest of Sinopec.
Prices of goods in the region are rising more slowly than expected. Inflation drives bond yields up; a lack of it could send them downward, even though the U.S. Fed is threatening to edge up rates around the world. Asian debt is already pricey – it may get yet more expensive.
The Chinese pork producer is slashing its offering to as little as $1.3 billion. But its reluctance to cut the share price won’t tempt investors turned off by the fat valuation. With an overhang of private equity shareholders and a hefty debt burden the IPO remains a tough sell.
The sacking of China Resources’ chairman will worry other state company bosses. But shareholders in Chinese groups have less to fear from government crackdowns on powerful individuals than the culture of treating outside investors as an afterthought. This remains unaddressed.
Valuations are soaring despite a global tech sell-off, as companies eye an audience that could hit 77 million by 2015. But it’s unclear how China’s couch potatoes will generate profit: investors like Alibaba founder Jack Ma are ploughing in time and money for uncertain returns.