Investment Daily Note

Market Highlights

State Council on Sunday issued a guideline to deepen reforms of state-owned enterprises (SOEs), under which SOEs would be divided into two categories, for-profit entities and those dedicated to public welfare. SOEs would be reformed, developed, regulated, appraised and assigned with different responsibilities accordingly. It would also encourage diversifying shareholder base, taking SOEs to public, creating conditions to effect whole-group listing. We expect stocks with SOE reform theme would benefit.

National Development and Reform Commission has approved construction of three railway lines: Dali-Lincang, Maitreya -Mengzi, Zhengzhou -Wanzhou, with total estimated cost of RMB142.77bn, which should boost railway and infrastucture stocks higher. However, China Railway Group (390.HK)is planning for substantial restructuring with China Railway Erju, both companies are suspended from trading this morning.