Share reform lifts market value of pilot firms
(Xinhua)
Updated: 2005-08-19 15:28

China's new round of split share reform has brought added market value of 10.5 billion yuan (1.3 billion US dollars) to 42 pilot companies, the China Securities Journal reported Friday.

By Aug. 17, the circulation market value of those 42 pilot companies reached 88.3 billion yuan, increasing about 13 percent from that on June 17, when they were announced to become experimental companies for the second round of split share reform.

Meanwhile, the composite index of China's stock market only rose 5.67 percent, the newspaper said.

Split share structure, which is seen as the major problem in China's stagnant stock market, refers to the existence of a large volume of non-tradable state-owned and legal personal shares.

According to the previous experience of pilot companies engaged in the reform, the listed companies need to provide shares or cash compensation to public shareholders so as to make all their shares tradable.

By Thursday, stock reform plans of 40 pilot companies for the second round reform had been passed by shareholders. A total of 1.7 billion yuan in cash has been paid to tradable shareholders as compensation, the newspaper said.

The split share reform has reduced the price earning ratios of those shares issued by pilot companies, it reported. Experts say the lower the PE ratio, the more attractive the shares will be to investors.

Now the PE ratio of pilot companies stands at 14.10, while that for all A-shares is 24.89, it said.

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