(China Alert) There will be reforms

Z-Ben Advisors holds the belief that SOE reform will accelerate on the Mainland regardless of recent volatility. Our view was reinforced when CSRC indicated further support for M&A activity last Friday. Indeed, it would appear to us that rumors of State Council targeting reform at the SOE-level before 2016 are all but confirmed. This will begin with consolidation within both central and municipal SOEs, with transparency and corporate governance forming the aspirational cornerstones. SOE reform remains a key (and largely unimplemented) policy goal of the current government and recent market conditions have created an opportune and urgent moment to ramp up such reform. Z-Ben Advisors believes this may lead to greater foreign participation in mainland boardrooms, Chinese firms hastening recent moves to expand overseas and a marked improvement in mainland capital market investability and stability.

Reform at the SOE level remains a key mandate from State Council that has yet to be implemented across a backdrop of interest rate, local government debt and exchange rate liberalizations. Equity volatility in the past month was exacerbated by……

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