SHANGHAI, June 15: China’s government is increasing its equity stakes in two financial companies in a move to restore confidence in China’s stock market after the key index hit a six-month low last week.
Central Huijin Investment Co, China’s main holding company for state-owned financial firms, bought shares of Everbright Bank and New China Life Insurance on the secondary market in Shanghai on Thursday and Friday, the two companies said in separate announcements. The shares were worth more than 100 million yuan ($16.31 million)
In addition, Central Huijin also purchased shares worth a combined 5.2 billion yuan in three exchange-traded funds (ETFs) that invest mainly in blue-chip stocks, multiple official media reported, citing unnamed market sources.
Huijin purchased shares worth 0.05 percent of Everbright’s total equity on Friday, raising its stake in the bank to 48.42 percent, Everbright said in an disclosure on the Shanghai Stock Exchange website. Such a purchase would be worth around 66 million yuan based on Friday’s closing price.
Everbright’s Shanghai-listed A-shares gained 1.0 percent on Friday to close at 2.93 yuan per share but were still down from the 2.98 level where they closed on June 7.
Huijin purchased shares worth 0.06 percent of New China Life, the insurer said on its website, raising Huijin’s total stake to 31.29 percent. The purchase would be worth around 44 million yuan based on Thursday’s closing price.
Both firms said Huijin planned to gradually raise its stakes further over the next six months.
China’s benchmark CSI300 index of the largest Shanghai- and Shenzhen-listed shares fell to its lowest point in 2013 on Thursday before recovering slightly on Friday.
Central Huijin, a subsidiary of China’s sovereign wealth fund, China Investment Corp., regularly increases its stake in the banks it owns when share prices fall, in order to boost investor confidence.
In October 2012, the firm invested a combined $470 million in China’s four biggest banks when share prices were low.
($1 = 6.1308 Chinese yuan)
(AGENCIES)
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