Date
23 August 2017
General Economy As China Reforms Attempt to Stoke Growth

The Big Picture: HUIJIN SHARE PURCHASES

Central Huijin Investment, an arm of China’s sovereign wealth fund, has boosted its stakes in the nation’s big four state-owned banks over the past six months, signaling Beijing’s continuing support for the key lenders. 

Between June 13 and Dec. 12, Huijin bought 179.46 million A shares in Agricultural Bank of China (01288.HK, 601288.CN), 175.45 million A shares in Industrial and Commercial Bank of China (01398.HK, 601398.CN), 102.8 million A shares in China Construction Bank Corp. (00939.HK, 601939.CN) and 112.76 million A shares in Bank of China (03988.HK, 601988.CN), according to regulatory filings from the lenders.

Huijin bought the shares through on-market purchases on the Shanghai Stock Exchange. Although the share purchases pushed up the Shanghai Composite Index only by 0.6 percent during the period, they provided crucial support for the A-share market when local investors’ confidence fell to the lowest point in late June due to a credit crunch in the banking sector. The benchmark index fell to as low as 1,950 points on June 27. On Monday, it closed at 2,160. 

The share purchases also came at a time when the global markets were fretting about uncertainties stemming from the expected scale-back of US quantitative easing measures. 

Global investors are now waiting to see if the Federal Open Market Committee will announce a tapering plan after a two-day policy meeting that ends on Wednesday. The Hong Kong stock market has been under pressure since last week due to speculation that the Fed will soon start reducing its debt purchases. If the taper indeed begins, Huijin could announce a new round of share purchases to support Chinese stocks, observers say.

China eases access for financial leasing firms

China’s banking watchdog has eased regulations on financial leasing firms to allow them to expand their business and establish units under a trial scheme, Xinhua news agency reported Monday, citing Li Jianhua, director of the regulator’s non-bank financial institutions supervision department. The new rules cover qualified commercial banks, domestic manufacturing firms, overseas leasing firms and overseas financial institutions. They will be allowed to invest in fixed-income securities and hold at least 30 percent of the units. 

New Third Board said to accept new listing applications soon

China’s New Third Board will begin accepting listing applications from domestic companies before the year is out, Shanghai Securities News reported Tuesday, citing a source from the exchange operator. The National Equities Exchange and Quotations Co. Ltd. is fine-tuning trading rules for the expansion of the share transfer system designed to help small and medium-sized enterprises raise money from the market, the source was quoted as saying. Previously, only technology firms in certain science and technology parks were allowed to list their shares on the board.

– Contact HKEJ at digest@ejinsight.com

JP/AC/RC

 

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