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Monday, 6 November, 2000, 18:43 GMT
China's Baosteel heads for stock market
Baosteel HQ
Analysts expect Baosteel to be popular with investors
China is gearing up for a sale of shares in the state-run steel giant Baosteel in what will be the country's biggest flotation. The BBC's Duncan Hewitt reports.

State-run media have likened Baosteel's imminent entry to the stock market to an aircraft carrier sailing into stormy seas.

Analysts - more prosaically - expect the initial public offering to be very popular with investors and say it will absorb much of the money circulating in Chinese stock market trading.

Either way, it is another major step in China's plans to bring government companies to the market and is a substantial boost to Baosteel's aim of expanding internationally.

Loss-makers absorbed

The price range for Baosteel's shares has been set at 3.5 yuan ($0.42) to 4.2 yuan each, suggesting the sale will raise 6.57bn-7.85bn yuan and become by far the biggest share listing in China.

Proceeds from the offering, which is reserved for domestic institutional and retail investors, will be used to fund plant expansions and upgrades as well as to repay debt.

In recent years, the company has had to cope with absorbing several lossmaking steelmakers, as the government attempted to solve the problems of ailing state enterprises through a series of mergers and aquisitions.

Baosteel's forecast earnings of 0.224 yuan per share for 2000 would make it much more profitable than many other Chinese steelmakers, several of which are making losses partly because of overcapacity in the industry.

The Shanghai Stock Exchange
Baosteel's IPO is expected to absorb much of the cash in the market
Environmental concerns are also coming to the fore.

The massive Capital Iron & Steel Works in Beijing was recently ordered to cut production as the city seeks to improve its air quality as part of its bid to stage the 2008 Olympics.

Baosteel, which produced 7.5 million tonnes of raw steel last year, has said it also hopes to list in Hong Kong and New York later this year.

The overseas listings were originally planned for July but were delayed because of market volatility and doubts about the performance of some overseas-listed Chinese stocks.

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