China's Sinopec Oil Drops Spinoff Hints as Rumor Mill Churns

BEIJING (TheStreet) -- A strict interpretation of China's much-feared law against "spreading rumors" could theoretically land a few stock analysts in the slammer for comments about the latest news from Sinopec (SHI).

But law enforcers who play fair could also point an accusing finger at Sinopec, a state-run petrochemical conglomerate whose Tuesday announcement of "progress on the sale of businesses and restructuring" sparked wild market chatter.

Sinopec's statement released in Beijing added few new details and did little to flesh out previous announcements about its plans to spin off certain non-core assets such as gas stations this year. The latest statement neither set a timetable nor hinted at any potential buyers.

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Some stock analysts in China reacted by speculating that potential investors might include Internet giant Tencent (TCTZF) and the Hong Kong-listed conglomerate Fosun, whose businesses range from property development to steelmaking. Several insurance companies were also said to be eyeing Sinopec's assets.

The spinoff plan has been brewing since last fall as part of a government "state-owned enterprise reform" project. Sinopec and other state-owned champions have been told to seek private investors for minority stakes or to buy certain non-strategic assets. Up to 80% of the assets in some state companies could be sold to private investors over the next few years.

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