China shares shook off weak economic data, surging nearly 5 percent Monday after a report that the mainland will finally begin to overhaul its stumbling state-owned enterprises (SOE).
"There are people expecting some kind of acceleration of mergers and acquisitions on the SOE stocks," Steve Wang, the chief China economist at Reorient Financial, said.
China's State Council approved an ambitious plan to overhaul the country's bloated state-owned enterprises, pushing them to become profitable, the South China Morning Post reported Saturday, citing sources close to the matter. The report described the plan as "Singapore-inspired," creating two companies similar to Singapore's state-owned wealth fund Temasek in an effort to separate the government from day-to-day business decisions.
Three Chinese state-controlled shipping companies -- China Cosco, China Shipping Development and China Shipping Container Lines -- had their shares suspended Monday, spurring renewed speculation of a potential merger.
Others noted that SOE reform plays were rallying, but it wasn't clear how sustainable the gains would be, with many still nervous after the Shanghai Composite plunged around 30 percent from its mid-June peak.