Shanghai Daily news

Stock markets on China's mainland  dived to a six-year low yesterday after the securities watchdog selected four firms for a trial program that could eventually pave the way for the sale of more than US$250 billion worth of non-tradable state shares.
"Worries about a flood of new shares punctured the market," said Lu Chengde, a trader with Guosen Securities Co. "Uncertainty over the share conversion plan will cloud the market until concrete proposals are put forward."
The Shanghai Composite Index, which tracks yuan-denominated A shares and foreign-currency B shares, plunged 2.44 percent to 1,130.83, the lowest level since May 19, 1999, when the gauge tumbled to 1,109.09.
The Shenzhen Composite Index, which covers the mainland's smaller stock market, fell 3.31 percent to 274.19.
The dropoff followed an announcement that the China Securities Regulatory Commission had released a list of companies that will be allowed to implement trial plans to let state shareholders cash out.
The securities watchdog picked four medium-sized companies to test the waters: packaging materials maker Shanghai Zi Jiang Enterprise Group Co, machinery producer Sany Heavy Industries Co, coal supplier Hebei Jinniu Energy Resources Co and computer services provider Tsinghua Tongfang Co. Trading in the shares of those companies was suspended yesterday until the firms' selloff schemes are either approved or rejected by their shareholders.
The tradable shares in the four companies total 7.6 billion yuan (US$918 million) while non-tradable shares amount to 15.5 billion yuan.
The four pioneers are scheduled to hold board meetings this week to finalize their sale plans, which need approval from two-thirds of all minority shareholders and a final nod from the state-owned Assets Supervision and Administration Commission. 
"It's hard to predict how many will succeed in persuading investors that their plans make sense," said Zhang Qi, a Haitong Securities Co analyst.
An unidentified official at Shanghai Zi Jiang said yesterday its government shareholders may offer owners of tradable equity two shares for every 10 they hold in exchange for the right to dump state stock. But he noted that a final decision had not been made.
The total capitalization of mainland list companies is about US$400 billion, and some two-thirds of that amount is represented by non-tradable shares, held by governments and state-owned institutions.
The Chinese government unveiled plans in 1999 and 2001 to start unlocking state holdings, only to pull back as share prices plummeted on concern the markets would be swamped with new equities.
The securities regulator revived the selloff program on April 29, but imposed strict limits on how quickly shares can be moved onto the market.