China releases shares of 4 public companies
The Chinese government released the untraded stok of four state-owned companies to the stock market on Monday (May 09). The four companies are: Shanghai based packaging maker Zi Jiang Enterprise Group, machinery manufacturer Sany Heavy Industry, computer producer Tsinghua Tongfang, and the coal miner Hebei Jinniu Energy Resources Company. The companies have a combined market capitalization of approximately $2.4 billion, which accounts for the 1% of China's total capitalization. The release of stocks came as a trial of the Chinese government's policy to free the state from the burden of state-owned companies in time. The government also plans to raise money for pension reserves and improve market efficiency through the sale of shares. However, the first impacts of the announcement on Monday sent China's main exchanges in Shanghai and Shenzhen to six-year lows because investors feared that the plan would release more shares into the market and cause prices to fall in the short term. The Shanghai index dropped 2.4% to 1180.83 and the Shenzhen 3.3% to 274.19. Baoshan Steel, the listed unit of China's largest steel maker Baoshan Iron and Steel, saw 3.6% decrease in its stock prices; the lowest level since June 30, 2003. Volkswagen and General Motors' Chinese partner Shanghai Automotive also saw 2.2% drop in its stock prices which bottomed to the lowest level in the history of the company.