Chinese Don’t Love SOEs. They Have No Choice
Shares of state-owned enterprises have been on fire as the market weighs ample liquidity and anemic corporate profits.
SOE bulls.
Photographer: Qilai Shen/BloombergEvery capitalist wants to talk up the companies they hold, including the Chinese government.
State-owned enterprises are back in the spotlight. Last November, the most senior securities regulator urged investors to explore stock “valuation with Chinese characteristics,” in a key-note speech widely understood to be aimed at helping to boost sentiment for listed SOEs and reverse their losing trend. In March, the government adjusted the performance evaluation methods for its largest firms to include metrics such as operating cash ratio and return on equity. These companies will be benchmarked against world-class businesses in terms of value creation, Beijing has pledged.