China state firms vow to boost share purchases to calm markets roiled by tariff war
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China’s stock benchmark rebounded in early trade on April 8.
PHOTO: AFP
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BEIJING – Several Chinese state holding companies vowed on April 8 to increase share investment, while a slew of listed companies announced share buybacks as Beijing stepped up efforts to stabilise a stock market rocked by US tariff woes.
The announcements by China Chengtong Holdings Group and China Reform Holdings come a day after state fund Central Huijin said it would increase share holdings to steady markets.
China’s stock benchmark rebounded in early trade on April 8, clawing back some of the 7 per cent plunge from April 7, which was fuelled by trade war and global recession fears.
Washington last week imposed extra tariffs of 34 per cent
China’s retail dominated stock market “is vulnerable to irrational pullbacks when hit by unexpected, negative news,” China International Capital Corp (CICC) said.
Investment by Huijin and other state investors “will not only provide direct liquidity support and break the vicious cycle, but also send a signal to calm market nerves”.
Chengtong said its investment units would increase holdings in stocks and exchange-traded funds (ETFs) to safeguard market stability.
“We are firmly optimistic towards the growth prospects of China’s capital markets,” the state investment firm said in a statement, vowing to support high-quality growth of Chinese listed companies.
China Reform Holdings, also known as Guoxin, said in a separate statement that an investment unit will increase holdings in tech companies, state firms and ETFs, tapping a relending scheme for share buybacks. Initial investment will be 80 billion yuan (S$14.8 billion).
Another state holding company, China Electronics Technology Group, said it would boost share buybacks in listed units to bolster investor confidence.
Share buybacks
Meanwhile, a growing number of listed companies - many controlled by the government - unveiled plans to buy back shares
Oil giant Sinopec said its state-owned parent plans to buy its China- and Hong Kong-listed shares worth at least two billion yuan over the next 12 months to demonstrate “confidence in future growth prospects”.
Orient Securities said it was studying plans to buy back shares in a bid to express optimism and actively protect shareholder interest.
Other listed firms that unveiled share buyback plans include Intco Recycling Resources Co, Spring Airlines Co and China Pacific Insurance (Group). Such moves were encouraged by regulators.
China’s state-owned asset regulator said on April 8 it would guide state-owned companies to contribute to market stability, while the country’s financial watchdog unveiled plans to raise stock investment limits for insurers.
State fund Huijin said on April 8 that it has ample liquidity and smooth financing channels to help it suppress abnormal market volatility in its role as market “stabiliser”.
In a statement, Huijin said: “Central Huijin has adequate confidence and competence to resolutely maintain smooth operation of the capital market.”
“We will act decisively when needed.”
Separately, China’s central bank said it supported Central Huijin Investment increasing its holdings in stock funds. REUTERS
