Date
22 January 2017
Metals firms will come under focus as China undertakes SOE reforms, says Frank Tian of Aberdeen Asset Management. Photo: HKEJ
Metals firms will come under focus as China undertakes SOE reforms, says Frank Tian of Aberdeen Asset Management. Photo: HKEJ

Non-ferrous metals plays seen next targets in China SOE mergers

Non-ferrous metals and iron and steel sectors are likely to be the next targets under China’s state-owned enterprises (SOE) reforms, according to a fund manager.

Authorities are working on proposals in accordance with the “one belt, one road” strategy, said Frank Tian, Asia equity investment manager at Aberdeen Asset Management Plc.

One of the goals of such a strategy is to alleviate industry oversupply problems, Tian said, adding that the metals sector will especially come under focus. 

Consolidation moves could involve firms such as Aluminum Corp. of China (02600.HK), China Nonferrous Mining (01258.HK) and China Minmetals Corp. (600058.SH), Shanghai Baosteel Group Corp. (600019.SH), Angang Steel Co. (00347.HK, 000898.SZ) and Wuhan Iron and Steel Corp. (600005.SH), the Hong Kong Economic Journal quoted Tian as saying. 

In other comments, he said that authorities would consider a merger of China COSCO Holdings Co. (01919.HK) and China Shipping Container Lines Co. (02866.HK), given the potential synergies.

Following the integration of the nation’s top two train makers, China CNR Corp. and CSR Corp., a new move involving COSCO Holdings and China Shipping Container Lines shouldn’t be surprising, according to Tian.

The two shipping companies have seen their shares suspended from trading, a move that is believed to be related to a pending announcement regarding a merger.

Asked about the prospects of mergers in the oil and gas sector, Tian said consolidation of the three big energy giants is unlikely, given their colossal size and scale of operations.

While mergers would be difficult, the companies could however be guided into some internal restructuring, he said, adding that the same case will apply to the big three telecoms firms.

[Chinese version中文版]

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