SHANGHAI (REUTERS) - Nine Chinese brokerages have pledged additional funds worth over 30 billion yuan (S$6.65 billion) to buy shares, the China Securities Journal said on Wednesday, answering fresh government calls to support a wobbly stock market.
The estimates by the Journal followed Tuesday's announcement by several Chinese brokerages that they would increase the size of their proprietary trading as weeks of turmoil in mainland markets showed little sign of abating.
Brokerages including Guotai Junan Securities Co, Changjiang Securities and Pacific Securities said they would increase the size of their equity investment funds to 20 per cent of net assets, up from 15 per cent currently.
The announcements follow a joint statement issued late on Monday by China's major institutions charged with supervising financial markets which encouraged listed firms to merge, offer cash dividends, and buy back shares to support the market.
An editorial in the English-language China Daily said on Wednesday (Sept 2) the move would help the stock market and economy in the long term.
"This move is not ostensibly aimed at restoring value to the stock market any time soon," it said. "But in terms of expediting the reform of state-owned enterprises and promoting healthy development of the stock market, the move to increase cash dividends for Chinese shares was long overdue."
Chinese shares have plunged about 40 per cent since their peak in mid-June on concerns over the slowing economy and a devaluation of the yuan in mid-August.
The editorial said the announcement "will help the stock market assume its role of rewarding SOEs that improve their performance through deeper reforms, domestic investors who believe in the healthy development of listed companies, as well as the Chinese economy at large".
"As long as policymakers can focus on implementing necessary long-term reform, there is a good chance that the Chinese economy will emerge out of the current difficulties in a better shape," it said.