What’s new: China’s two stock exchanges received applications from four publicly tradable real estate investment trusts (REITs) that will invest in infrastructure projects, the first batch of such REITs in China.
The REITs to be listed on the Shanghai Stock Exchange are two high-way construction investment funds managed by Zheshang Securities Co. and Sinolink Securities Co., according to the exchange.
The two REITs to be listed on Shenzhen Stock Exchange include one to invest in a waste disposal and biomass power generation project at Shougang Environment Industry Co. Ltd., a wholly owned subsidiary of state-owned steelmaker Shougang Group (000959.SZ). The REIT is managed by state-owned AVIC Securities Co. Ltd.
The other REIT to be listed in Shenzhen invests in infrastructure projects in Shekou Industrial Park in Shenzhen operated by state-owned China Merchants Group’s local subsidiary. The REIT is managed by Bosera Asset Management Co. Ltd.
All four REITs are pilot projects selected by the National Development and Reform Commission (NDRC) and recommended to the China Securities Regulatory Commission (CSRC).
The background: Dozens of companies have begun preparing to launch publicly tradable infrastructure REITs since the NDRC and the CSRC announced a long-awaited pilot program April 30, 2020, for such investment vehicles to provide new funding for infrastructure, bolster the economy and counter economic fallout from the coronavirus shutdowns.
REITs are a collective investment concept in which people can buy shares in a company that owns, operates or finances income-producing properties. Like mutual funds, REITs are popular with investors in developed markets like the U.S. But the products have remained marginal in China.
China State Railway Group Co. Ltd., a state-owned railway operator, last year identified three railway lines to include in the REIT pilot program.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com)
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