Head of China Research - Forsyth Barr Asia, Forsyth Barr Asia

David Millhouse

Head of China Research - Forsyth Barr Asia

Forsyth Barr Asia

Thematic (Sector/Industry)

China Energy / Thematic (Sector/Industry)

Local press has been heavily speculating that we will get a detailed announcement of the SOE reform plan by March, where the number of central SOEs may be reduced from the current 112 to 30-60 over the next&nbsp; several years.&nbsp;It was also speculated overnight that China is considering forging mega-mergers among its big state oil companies, seeking to create new national champions. It was also speculated last week that China was looking at merging China Tel and China Unicom.&nbsp;We had hoped that the focus of SOE reform would be about (a) reducing the state&rsquo;s role in the economy (b) promoting SMEs and private companies (c) improving the efficiency and SOEs and aligning management incentives with minority shareholders.&nbsp;From what we have seen thus far however, it seems the priorities will be set at avoiding internal competition in overseas markets and creating a few large Chinese global champions.

Local press has been heavily speculating that we will get a detailed announcement of the SOE reform plan by March, where the number of central SOEs may be reduced from the current 112 to 30-60 over the next&nbsp; several years.&nbsp;It was also speculated overnight that China is considering forging mega-mergers among its big state oil companies, seeking to create new national champions. It was also speculated last week that China was looking at merging China Tel and China Unicom.&nbsp;We had hoped that the focus of SOE reform would be about (a) reducing the state&rsquo;s role in the economy (b) promoting SMEs and private companies (c) improving the efficiency and SOEs and aligning management incentives with minority shareholders.&nbsp;From what we have seen thus far however, it seems the priorities will be set at avoiding internal competition in overseas markets and creating a few large Chinese global champions.

Haitong Securities Co Ltd (A) (600837 CH)

Shanghai Pudong Development Bank Co. (600000 CH)

Inner Mongolia Baotou Steel Union (600010 CH)

Huaneng Power International Inc (Adr) (HNP US)

China Northern Rare Earth Group High-Tech (600111 CH)

China Northern Rare Earth Group High-Tech

China Merchants Securities Co Ltd (A) (600999 CH)

China Pacific Insurance (Group) Co., (601601 CH)

Zhejiang Zheneng Electric Power A (600023 CH)

China Merchants Securities Co Ltd (H) (6099 HK)

CHINA SOE REFORM: Thoughts and implications of OIL MERGER rumours