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China Offers Investors a Glimpse of Stock Market Rescue

BEIJING—China gave investors a fresh glimpse of the extent of its efforts to rescue a slumping stock market in recent weeks, as it disclosed substantial new government holdings in key state banks and other financial firms.

Central Huijin, an investment arm of China’s sovereign-wealth fund, increased its holding in three big state-run banks, one midsize bank and an insurer as part of the market rescue effort, according to filings with the Shanghai and Hong Kong stock exchanges. That effort, which included a number of government agencies together called Team China, was intended to stop a market slide that has knocked the Shanghai stock market’s main index down more than a quarter from its June high.

Industrial & Commercial Bank of China, IDCBY -2.50 % Agricultural Bank of China BACHY -2.31 % and Bank of China—as well as China Everbright Bank 601818 0.00 % and New China Life Insurance Co. 1336 0.62 % —all said they had been notified of share transfers that had increased the number of shares held by Central Huijin. It wasn’t clear when the purchases were made.

None of the firms specified which agency had transferred the shares to Central Huijin. It is likely to have been China Securities Finance Corp., a government-backed margin-financing company that moved to prop up the slumping stock market in July.

On Friday, China’s securities regulator said that China Securities Finance Corp. had recently transferred some of the stock it purchased to Central Huijin, which had already been a major shareholder in China’s biggest state banks.

ICBC, China’s biggest lender by assets, said Central Huijin increased its stake in the bank by 1.01 billion shares, bringing its holding to 35% of the lender’s total stock. Agricultural Bank of China Ltd. ACGBY -1.84 % and Bank of China Ltd., the No.3 and No.4 banks, said Central Huijin added 1.26 billion shares and 1.8 billion shares respectively, bringing their stakes to more than 40% and nearly 65% of the lenders’ total shares.

The stake increases are relatively small given Central Huijin’s already-substantial holdings. Its stake in ICBC’s mainland-traded A shares totaled 46.3% after the increase, compared with 45.9% as of May 26.

Share prices started sliding in June following a steep run-up over the previous year. Stock prices on Shanghai’s main board tumbled around 30% from this year’s peak before the massive government rescue—hastily put together in July—helped stem the losses.

As part of the rescue effort, China directed some state agencies to buy shares and others not to sell. It also put a halt to new stock offers and relaxed rules on margin trading, a key form of financing for stock purchases, and launched a police probe of what it called “malicious selling.”

In a separate statement to the Shanghai Stock Exchange on Wednesday, New China Life Insurance Co. said that Central Huijin had added 28.25 million shares in the insurer, bringing its stake to more than 32%.

Additionally, China Everbright Bank Co. said Central Huijin had bulked up its holding in the bank by 629.69 million shares, giving it more than 23% of the lender’s total shares.

The Wednesday announcements of these big stake changes were made after the market closed. The Shanghai Composite Index ended up 1.2% on Wednesday, but the three state lenders all ended down. ICBC lost 1.3%, Bank of China shed 1.4% and Agbank ended 0.6% lower. China Everbright Bank ended flat while New China Life Insurance ended up 0.02%.

market news – Bing News

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