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June 13, 2005
UPDATE: PRC PLAN TO SELL OFF THE STATE'S INTEREST
You may remember the experiment to test the "unwinding" of the state's interest in the Chinese stock markets. See this post for a refresher.
Investors of two of the four companies involved have voted on proposals to offload state shares. IHT reports that Tsinghua Tongfang investors rejected the proposal put to them; Sany investors accepted theirs. Partial success for Chinese regulators.
The Financial Times of London paints a very different portrait:
"China's plan to reform the complicated shareholder structure of its stock market has suffered a setback as investors in one of the four companies involved in its pilot programme rejected the proposals." [Subscription required.]
Is it accurate to call this a "setback?" Possibly. As I explained in my May 11 post, companies were carefully selected to ensure the "experiment" succeeded. And yet FT didn't even bother to tell its readers of the nearly 100% vote in favor of the plan at Sany.
The Sany proposal passed with 99.9% of the vote of tradeable shares -- flying colors -- Tsinghua Tongfang's failed by only 4 percentage points. Why? Perhaps we might come up with an answer as investors talk to the Chinese press in the next few days.
Crazy old Xinhua must have been smoking something. The (Hong Kong) Standard adds -- in the final paragraph of the IHT/Bloomberg article run otherwise word for word -- Xinhua's first report, make that incorrect report, of the passing of Tsinghua Tongfang proposal passed:
Tsinghua Tongfang's statement contradicts a report from Xinhua news agency, which said the plan was approved by 93.4 percent of shareholders of the tradable stock at the meeting. Xinhua Saturday corrected its report ``after checking with the company's board.''
What a great line: "after checking with the company board." Touché!
* * *
Editor's Addendum, June 21, 2005
Dan Slater of FinanceAsia.com, discusses in some depth the investor rejection of the Tsinghua Tongfang proposal here. He proffers two reasons for its failure to pass:
1. A-share investors holding out for more shares.
2. Shareholder opinion that the company is managed too poorly to drive up the share price.
Perhaps, but the verdict is out. We continue to monitor the Chinese media for relevant information.
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