Central Huijin buys stocks in China's major banks
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Xinhua, October 10, 2011
Central Huijin Investment Ltd, an arm of China's sovereign wealth fund, bought shares in four major Chinese State-owned banks on the secondary market on Monday, the company said Monday.
The four banks include the Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC), Bank of China (BOC) and China Construction Bank (CCB), according to the company.
The move is aimed at supporting the steady operation and development of major financial institutions and stabilizing their stock prices, the company said.
It is not clear how many shares Central Huijin bought in the banks.
China's financial stocks have been weak amid the government's firm tightening measures on liquidity meant to ease inflation.
The People's Bank of China, or the country's central bank, has raised interest rates three times and hiked the reserve requirement ratio six times to drain excessive money out of market this year.
The statement came after the Shanghai and Shenzhen markets ended trading.
ICBC's share price rose 0.25 percent to 3.99 yuan at Monday's market close. That of ABC stood at 2.47 yuan, up 0.41 percent from the previous close. BOC saw its share price stand at 2.87 yuan, up 0.7 percent, while CCB's price gained 0.23 percent to 4.41 yuan.
The benchmark Shanghai Composite Index fell to 2,344.79 on Monday, hitting its lowest level in more than two years. The index has slid nearly 17 percent so far this year due to concerns that the tightening measures may hurt the world's second-largest economy.
The Hang Seng Index in Hong Kong, which closed after the release of the information, rallied in the last half hour before close, trimming earlier losses to end flat.
"The stock purchase is more like sending a positive signal to the market to prevent volatile fluctuations at a time when various uncertainties are clouding the markets," said Yin Zhongli, a financial expert from the Chinese Academy of Social Sciences, a government think tank.
However, the markets will not see a turning point if the government maintains its firm stance on tightening, he said.
Government officials have reiterated that fighting inflation remains a top priority for the government's agenda this year. This point was once again stressed by a Monday report in the Shanghai Securities News, citing the central bank.
Sun Jianbo, an analyst with China Galaxy Securities, said the move is a short-term measure and a normal allocation of funds when stock prices are cheap.
It is not simply a way to save the markets, although that may be the intent, he said, adding that it is difficult to prop up the markets simply by buying shares.
Li Daxiao, director of the Yingda Securities Research Institute, was more optimistic about the move, saying it signals that the central government is looking to support the stock markets. The move is very significant for stabilizing the markets and the markets will likely rally in the short-term, he said.
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