China Petroleum & Chemical Corp. (Sinopec) (00386.HK), Asia’s largest oil refiner, has announced a restructuring of its retail oil business in a bid to bring in private capital and boost the value of the operation.
More significantly, the plan offers evidence that Beijing is keen to open up the energy sector for private investment, in line with the goal outlined by top leaders last year to reduce the state’s role in the economy.
Sinopec, the world’s second-largest refined oil supplier in terms of the number of gas stations, said late Wednesday that its intends to sell up to 30 percent of its retail oil business to private investors. The restructuring of the oil product marketing segment is aimed at introducing “social and private capital” to diversify the ownership of the business, it said in a regulatory filing.
Following the news, Sinopec saw its shares surge 9.4 percent Thursday in Hong Kong, making it the best performer among the Hang Sang Index constituents. The rally came despite a weak broader market.
The latest announcement marks the opening up of China’s petroleum and chemical sectors, which have been monopolized by state-owned enterprises for decades, market observers said.
The route outlined by Sinopec is the most efficient way to de-monopolize the sector, they said, noting that private investors can enjoy a stake in the oil giant’s oil product marketing segment without going through a competitive licensing stage or investing heavily in infrastructure.
There are hopes that the other listed Chinese energy behemoths, PetroChina Co. Ltd. (00857.HK, 601857.CN) and CNOOC Ltd. (00883.HK), will follow the same path and bring in private capital.
OTC exchange to launch financing products
China’s over-the-counter trading platform will start offering corporate bonds, convertible bonds and preferred shares this year to give listed firms more choices to raise money, China Securities Journal reported Friday, citing Yang Xiaojia, chairman of the National Equities Exchange and Quotations, operator of the exchange. The move is part of plans to fine-tune the market mechanism of the so-called New Third Board, speed up innovation and improve services for small companies across the board. Brokerages and fund houses will be encouraged to offer products for general investors, Yang was quoted as saying. There were 642 listed companies on the OTC market as of now, up 80 percent from the end of 2013, with a combined market value of 125.5 billion yuan (US$20.62 billion).
Beijing sells three land plots for 10.96 bln yuan
Beijing authorities sold three land plots Thursday for a combined 10.96 billion yuan (US$1.8 billion), Shanghai Securities News reported Friday. Thaihot Group Co. Ltd (000732.CN) secured one site, loacted in Fengtai district, for 4.958 billion yuan or 63,395 yuan per square meter, it said. Centaline Beijing analyst Zhang Dawei was quoted as saying that land auctions in Beijing this month could fetch over 40 billion yuan, with sales for the first two months of the year seen topping 80 billion yuan.
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