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Thu, Jan 04, 2007 - Page 10 News List

China executives make large gains on soaring stocks

AFP , BEIJING

Company executives in China were the big winners of last year's soaring stock market, with the top 50 executives worth nearly 40 billion yuan (US$5.1 billion), state media said yesterday.

None of the top 50 was worth less than 200 million yuan and half of the top 50 saw their stock portfolios break the 500 million yuan mark, the official Xinhua news agency reported.

Zhang Jindong (張近東), chairman of Suning Appliance Co (蘇寧電器), one of the country's largest home appliance chain stores, has become China's richest executive, according to the report.

The 210 million shares he holds in the company quadrupled in value last year, pushing his estimated wealth to nearly 9 billion yuan, it added.

Lu Guanqiu (魯冠球), chairman of Wanxiang Group (萬向集團), was catapulted to second spot on the list due to steep rises in the value of his shares in Chengde Lulu (承德露露), a beverage maker, and Wanxiang Qianchao Co (萬向錢潮), an auto parts manufacturer.

The take off in executive fortunes has been set off by shareholder reforms which allow previously non-tradable state-owned shares to be converted into ordinary stock and turned into cash, the report said.

After stagnating for the past five years, China's stock markets finally boomed in the second half of last year.

The benchmark Shanghai Composite Index hit a record 2,675 points on the last trading day last year, bringing gains for a remarkable year to 130 percent.

The State Information Center, the Cabinet's brains trust, predicted that the value of China's stock markets could grow by 20 percent this year, Xinhua said in a recent report.

News that some Chinese manage to make literally billions without having to work extra comes amid signs that the wealth gap is deepening in China, with the poor becoming even poorer.

An analysis of poverty in the period from 2001 to 2003 showed a slight decline in the income of the most destitute 10 percent of China's population, the World Bank said last month.

Joseph Cheng (鄭宇碩), a China expert at the City University of Hong Kong, argued few Chinese were likely to complain about the stock gains as long as the money was earned in an honest manner but problems could arise if they suspect foul play.

"Many average citizens doubt the legitimacy of the wealth accumulation by some of the plutocrats and that is where discontent is likely to rise," he said. "Therefore the operation of the stock market and company management needs to be regulated and supervised so that they can be more transparent and the manipulation of share prices can be prevented."

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