Central Huijin Investment Co, a unit of China Investment Corp, would continue to increase its holdings in the nation's three largest banks over the next 12 months - a move which, analysts said, was a clear signal to stabilize the market and bolster investor confidence.
"The move is a clear indication that the government is trying to stabilize the market after the benchmark Shanghai Composite Index fell 6.1 percent in the third quarter, the worst performance among the largest emerging markets, and at a time when the long-awaited Growth Enterprise Board (GEB) is to be launched later this month," said Lu Junlong, analyst, China Finance Online, a NASDAQ-listed finance group.
The Beijing-based Huijin bought 30.07 million yuan-denominated shares of Industrial & Commercial Bank of China Ltd (ICBC), taking its ownership to 35.42 percent from 35.41 percent, ICBC said in a statement. Huijin also purchased 5.13 million shares of Bank of China (BOC) and 16.1 million shares of China Construction Bank (CCB), boosting its stakes in the two banks to 67.528 percent and 57.09 percent respectively. Huijin completed the purchase on Sept 28.
ICBC, the world's largest bank by market value, will release 236 billion shares, which will become tradable later this month. Huijin owns nearly half of these shares.
According to the Securities Daily, net sales by substantial shareholders in September totaled 1.9 billion yuan, compared to 5.3 billion yuan in August.
"Due to the sluggish overseas markets and the economic downturn in 2008, Huijin's move couldn't stabilize the market immediately. Yet, thanks to the country's stimulus plan and the positive signal released by Huijin's investment, the A-share market recovered about four months earlier than overseas markets," said Li Daxiao, director of research at Yingda Securities.
"Now, most overseas markets have rebounded and China's economy is recovering. We could expect a buoyant market with the positive signals released by the government," Li added. |
