Foreign investors may hold tradable shares
(Xinhua)
Updated: 2005-10-25 09:47

Overseas investors with non-tradable Chinese shares are expected to be allowed to hold tradable shares as strategic investors, China Securities Journal reported Monday, citing sources it described as "authoritative".

The newspaper said government departments are studying and formulating regulations on the holding of tradable shares by the overseas investors.

To date, overseas investors are allowed to hold tradable shares only through qualified institutional foreign investors (QIFF).

The newspaper said China is going to step up its pace of share reform in the near future and initial public offerings will be resumed after the reform of all of the country's domestically listed firms.

After years of debate, China decided to end the split share structure, which was the major cause of China's stock market stagnation.

China's Securities Regulatory Commission said earlier this year the split share structure has been a barrier to the regulated development of the capital market and basic reform in state assets management.

Split share structure refers to the existence of a large volumeof non-tradable state-owned and legal personal shares.

Currently, only about one-third of the shares in domestically listed firms float on the markets. The structure puts public investors in a worse position than the actual controllers in making corporate policies and disposing of the firms' profits and assets.

Under current share reforms, listed firms or majority stock holders pay compensation to minority stock holders in exchange for the right to float their mass untradable shares on the market.

Minority stock holders were given about three shares in compensation for very 10 shares they have.