state-owned enterprises

Russia is rethinking investor friendly dividend reforms as the Ukrainian crisis weighs on its faltering economy. Rules introduced last year that would oblige state companies to put more of their profits in shareholders’ pockets may be shelved, according to a report out on Wednesday.

Russia has been pushing state companies to pay more generous dividends in an effort to improve the country’s investment image and boost interest in upcoming privatisations. Rules introduced in late 2012 setting a minimum 25 per cent pay out were a step in the right direction but, as often happens with Russian regulations, there was room for interpretation. 

China’s reform plan released after the Communist Party’s Third Plenum has been hailed as ambitious and bold. It certainly has far more in it than just the one-child policy reform and abolishment of labour camps. Here is beyondbrics’ summary of the plan, grouped by category. 

Initial reactions to the statement that came out of China’s third plenum can be summed up in three simple words: ‘was that it?’ Investors bemoaned the lack of details, and sent Chinese shares lower by 2 per cent on the day following the release of the document.

Fast forward to Friday, and Chinese equities are spiking. So have minds changed? 

Russia’s finances are being squeezed by a contraction in economic growth and faltering oil prices. So what better time for Russia to demand bigger dividends from its powerful state companies?

New rules forcing the likes of Gazprom, Rosneft and Sberbank to share more of their profits with investors will land an extra $8bn in the Russian budget in 2014 and continue to boost state coffers for years to come, according to a report by Markit Equities Research, the financial information services company. 

China Development Bank is one of the world’s largest but least understood financial institutions. Riddled by debt 15 years ago, CDB has now comfortably surpassed the World Bank as the biggest international lender to developing countries.

And that only begins to tell the story about CDB. Overseas development lending is a small part of its overall business, with most of its Rmb7.5tn ($1.2tn) in assets focused on catalysing China’s own growth. 

By Dominic Scriven of Dragon Capital

It has been a hard time for investors in Vietnam in recent years. Sky high inflation, lax lending to unproductive sectors – especially state-owned enterprises, a depreciating currency and high levels of non-performing loans have caused foreign investors to think twice about buying into the country.

However, on Sunday the Lunar New Year will be ushered in with spectacular fireworks, wonderful flower markets, family banquets and colourful celebrations. The coming Year of the Snake, the 6th animal in the Chinese zodiac, is commonly associated with focus and discipline. Both will be needed if the government intends to carry on its promise of economic reform. 

Source: Agribank

By Jake Maxwell Watts and Nguyen Phuong Linh

Just when Vietnam’s weary investors were breathing a little easier amid improved economic data and an unexpected upturn in its stock markets, a long-simmering bank scandal burst back into the open with the arrest of another high-profile banker. Vietnam’s minister of public security announced on Wednesday that Pham Thanh Tan (pictured left), ex-chief of the state-owned Agribank, had been arrested for “irresponsibly causing serious consequences.” 

Morgan Stanley has proposed an unlikely candidate to lead Indian equity markets to recovery – the country’s much-maligned public sector companies (PSUs).

Generally, investors are wary of government control and sectors such as utilities and electricity. But in a note to clients this week, analysts from the American bank set out three reasons why Indian PSUs may be set to rally. 

If investors were asked to give a chunk of money directly to emerging market governments, most would refuse. But in the stampede towards low-cost, index linked investment in emerging markets, many will effectively end up doing just that, according to a report in Monday’s FTfm.

Arjun Divecha, chairman of GMO’s board and manager of three of its emerging markets funds, says GMO research shows that about 35 per cent of the constituents of the widely benchmarked MSCI emerging market index are companies that are owned or controlled governments and that these companies actually account for about 70 per cent of the earnings generated by that index. 

By Valentina Romei and Rob Minto

Another month of disappointing China trade data: on Monday, overall Chinese exports increased just 2.7 per cent in August from a year earlier, and imports dropped 2.6 per cent. Export growth was higher than July’s worrying 1 per cent, but it’s still far from the double-digit growth that was once the norm.

So which companies are providing China’s exports, and where will growth come from in future? Chart of the week takes a look. 

Moisés Naím on the A-list asks – what have Pemex, PDVSA and YPF got in common, other than being state-owned in countries rich in hydrocarbons? Their most surprising similarity is that during a period in which oil prices are booming, these three companies are declining.

Read more and find out why here.

 

Few companies embody the sheer size and ambition of the Chinese state-owned enterprise like Sinopec, China’s biggest oil and gas refiner. Not only is Sinopec one of the world’s biggest oil companies by asset size, it is also the single most acquisitive Chinese state-owned company, having invested more than $35bn in overseas deals since 2009.

But for Sinopec Group’s Hong Kong-listed subsidiary, which is majority-owned by Sinopec Group, the past year has not been smooth sailing. 

Vietinbank, one of Vietnam’s biggest state-owned banks, will next week embark on a global roadshow to promote a dollar bond issue – a test of international investor appetite at a time of ongoing economic turbulence.

Can Vietinbank succeed where other state-owned companies have failed in trying to issue international bonds? 

Vietnam’s Communist rulers have finally accepted, at least rhetorically, the need to restructure the large, inefficient state-owned enterprises (SOEs) that many economists believe are largely to blame for recent economic turbulence.

Now there are tentative signs that the government may be starting to walk the talk, trying to ensure that SOEs stop wasteful spending on karaoke bars, taxi companies and grandiose building projects. 

Manmohan Singh, India’s prime minister, has lit a proverbial fire under the country’s big state-owned companies. He has ordered a $35bn wave of public sector investment – that he will personally oversee – to reverse a decline in the fast-growing economy’s growth rate.

But his top bureaucrats can do much more to get better value out of a state sector that represents a considerable chunk of the Bombay Stock Exchange’s market capitalisation.