Event:
Recently, State-Owned Assets Supervision officially declared to support “Overweight” and repurchase of stake of the central -government controlled listed enterprises if needed. Additionally, relative rules were also stipulated by the CSRC to simplify repurchase procedures of the listed enterprises.
Comment:
According to our calculation, there are totally 41 paper packaging listed companies, of which one is controlled by the central government, 14 are controlled by the local states, and 26 are privately owned. As supported by the State, we think it is quite possible for the central government controlled enterprises to increase their stakes, while local state-owned enterprises will increase their stocks as necessary. As for private listed enterprises, there are many uncertainties towards stake increase with the special stake equities as an exemption. Given the capital flow, it will be difficult for the listed companies to repurchase their own stocks.
Potential Risks: Overweight and stock repurchase uncertainties; global economy and international capital market fluctuation bring more volatilities towards the stock market.