China’s top investor to sell $1bn share in offshore company
By LORI GRINSON-BRADYSource: Reuters The Chinese government is set to announce the biggest asset sale in its history this week as it prepares to roll out its financial regulatory framework.
The sale of about $1.7bn in shares of a Hong Kong-listed company will help the Communist Party meet an $8.3tn deficit in its budget and is seen as a signal of Beijing’s commitment to reform in its financial system, which is run by the People’s Bank of China (PBOC).
The government said it will sell shares of the company, the Overseas Equity Securities Company, or OESCO, and will use the proceeds to support public investment in the sector.
The move comes a week after Chinese President Xi Jinping announced a crackdown on tax evasion in the country, as he attempts to restore trust in a society that has become increasingly critical of the ruling Communist Party.
Mr Xi, whose popularity has slipped to an eight-year low in the wake of a corruption scandal, has also set out plans to roll back the power of the Communist party to govern and the country’s own economic growth.
China has also been struggling to boost domestic demand, a major challenge for Beijing.
China’s stock market has fallen over the past two months, falling as much as 2.5pc on Thursday as investors sought to cut costs amid slowing domestic demand.
“I think that this will help lift confidence and encourage investors to stay away from the stock market,” said Michael Kors of Credit Suisse.
But other analysts said the sale was unlikely to help revive the stockmarket.
The company, which makes a range of financial products and services, is the latest in a string of Chinese companies to be sold in the last year as the economy continues to shrink.
The state-owned CITIC Bank was the latest to be privatised last year, as was a Hongkong-listed brokerage company in 2016.
A number of mainland Chinese companies have been bought up and sold over the last two years.
The sale of OESCOC is believed to be the biggest, but there have been several other deals in the past year.