The State Council yesterday approved the long-awaited Anti-Monopoly Law, a move analysts said was a step forward in China's battle against monopolies by state giants and foreign multinationals. It aims to provide a free and fair competitive environment to all enterprises. The legislation, which will be submitted to the National People's Council Congress Standing Committee for deliberation, was approved in principle at a State meeting chaired by Premier Wen Jiabao The draft law contains articles regulating monopoly agreements, abuse of dominant market status and large-scale consolidation. It defines "monopoly" as a single operator controlling half or more of an industry's overall market share, or two operators colluding to hold two-thirds, or three holding three-quarters. According to the draft, companies seeking mergers or acquisitions will have to notify the authorities if one or more of the parties involved has a turnover of 1.5 billion yuan (US$185 million) or more.

(South China Morning Post, June 8, 2006)

Flood of China share offerings may cool surging stock market

Investors have cheered China's decision to end a year-long freeze on initial public offerings on the mainland's stock exchanges. But with dozens of planned IPOs in the pipelines, analysts say a flood of new issues could siphon funds from existing stocks and cool the surging market. "These offerings could trigger a fall in some overvalued shares," says Wang Cheng, an analyst in Beijing with Centergates Securities. "The current surge is mainly driven by an oversupply of funds, and some investors would get hurt in the downtrend." If the May 18 lifting of the freeze slightly cools China's market, that is fine with some analysts, who increasingly view it as overheated. China's benchmark Shanghai Composite Index has gained nearly 25% since mid-April, when regulators unveiled a draft policy to end the IPO freeze. Yesterday, the index slipped 5.49 points to end at 1679.13 -- 45% higher than it was at the end of last year. But some analysts question if regulators can control the pace of IPOs in a way that expands the market's offerings without hurting share prices.

(The Wall Street Journal Asia, June 7, 2006)

Equal treatment for all banks under QDII

China will treat its lenders and overseas banks the same in approving licences to convert yuan deposits into US treasuries and other fixed-income securities abroad, according to the chief executive of the Hong Kong Monetary Authority. "All will be treated equally and go through the same criteria for approval," said Joseph Yam Chi-kwong who met with the People's Bank of China governor Zhou Xiaochuan and Liu Mingkang, chairman of the China Banking Regulatory Commission yesterday in Beijing. "The CBRC will also issue clearer guidelines and define what fixed-income products are," added Mr Yam.

(South China Morning Post, June 6, 2006)

Six mainland insurers get go-ahead for BOC shares

China will let six insurance firms invest US$600 million (HK$4.68 billion) in Bank of China's Hong Kong-listed shares, as it slowly opens the door for domestic insurers to invest abroad, state media reported. China Life Insurance, and smaller Taikang Life would be given quotas to invest overseas. Details were not provided. The pair, along with China Pacific Insurance (Group), Ping An Insurance (Group) of China and the state parents of China Life and PICC Property and Casualty, will be given quotas to invest a collective US$600 million in newly listed BOC shares Shanghai Securities News said, citing an unnamed source. The six will make the investment under China's fledgling Qualified Domestic Institutional Investor scheme. Official new rules governing overseas investments by the insurance industry will be released around August or September, the newspaper said.

(The Standard, June 5, 2006)

Firms in fund mess named and shamed

China's stock exchanges have published a list of key shareholders that have misappropriated a combined 33.6 billion yuan from their listed subsidiaries, including three Hong Kong-listed companies. Nanjing Panda Electronics, Luoyang Glass and Shandong Xinhua Pharmaceutical were on a list of 189 A-share firms that have had funds borrowed illegally by their parent companies or majority shareholders. Nanjing Panda and Luoyang Glass have dual listings in Hong Kong and Shanghai, while Shandong Xinhua is listed in Hong Kong and Shenzhen. The naming of shareholding firms that have illegally borrowed funds from their listed entities is part of a campaign by the China Securities Regulatory Commission to improve corporate governance and support the rejuvenated mainland A-share market. "The fact that 14 percent of all A-share listed companies are in a situation where the majority shareholder is hurting the interests of the minority shareholders means the corporate governance issue will remain a key concern for international investors looking at China," ABN Amro head of China research Fan Cheuk-wan said.

(South China Morning Post, June 2, 2006)