More Chinese state companies announce share purchases in a sinking market

Published Thu, Oct 19, 2023 · 11:15 PM

The announcements by the companies, including China State Construction Engineering and Aluminum of China, come just days after 10 other central state-owned enterprises (SOEs) unveiled similar share purchase plans. PHOTO: REUTERS

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AT LEAST seven listed companies owned by China’s central government said late on Thursday (Oct 19) that their controlling shareholders planned to increase holdings or buy back shares, as Beijing steps up efforts to stabilise sinking stocks.

The announcements by the companies, including China State Construction Engineering and Aluminum of China, came just days after 10 other central state-owned enterprises (SOEs) unveiled similar share purchase plans.

They also follow moves by China’s state fund Central Huijin Investment to increase stakes in China’s “Big Four” state banks, as well as a slew of other supportive measures that have so far failed to revive a flagging stock market.

China’s bluechip CSI300 Index slumped more than 2 per cent on Thursday to 11-month low amid heavy foreign selling, even after Wednesday’s release of better-than-expected economic data.

Other companies that announced share purchase plans on Thursday include China Shenhua Energy, GD Power Development and China National Nuclear Power.

“We see Beijing’s measures to boost equity market sentiment having limited impact ... as investors are more focused on improvements in the real economy and company earnings before making a decisive longer term allocation to Chinese equities,” said Gary Tan, portfolio manager at Allspring Global Investments.

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The selling comes as Country Garden Holdings is in the final hours to meet an interest-payment deadline and avert its first-ever US dollar bond default.

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Investing in an emerging markets ex-China index tracker offers a relatively larger exposure to markets like Taiwan, where companies such as TSMC stand to benefit from robust semiconductor demand.

Tap emerging market growth, while avoiding specific China risks

Its blue-chip stock index is near one-year lows as investor sentiment remained weak in recent months despite stimulus policies to shore up confidence.

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Under the revised rules, investors and related parties who hold shares with transfer restrictions are not allowed to short sell the company’s stock during the lockup period.

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The move may boost the lenders’ shares when trading starts at the Shanghai stock exchange on Thursday morning.

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However, “we view the Chinese equity market being closer to the bottom,” Tan said, citing low valuation and increasingly appealing dividend yields. REUTERS

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