A Chinese government investment arm bought shares in the country’s four biggest state banks yesterday, moving to support the ailing stock market.
The announcement by Central Huijin Investment Ltd (中央匯金), an arm of the sovereign wealth fund China Investment Corp (中國投資公司), came after the benchmark Shanghai Composite Index closed at its lowest level in more than two years, losing 0.6 percent to 2,344.79.
Share prices have languished despite China’s still robust growth, weighed down by worries over Europe and tightening liquidity.
The market dropped yesterday following reports that housing prices fell last month, prompting a sell-off of property stocks.
Poly Real Estate Group (保利地產) lost 3.5 percent and China Vanke (萬科集團), the industry leader, shed 3.3 percent.
Central Huijin is the major shareholder in China’s big state-run banks. The company said in a brief announcement on its Web site that it bought shares in Industrial & Commercial Bank of China (ICBC, 中國工商銀行), Agricultural Bank of China (中國農業銀行), Bank of China (中國銀行) and China Construction Bank (中國建設銀行) and that it would continue its market-support operations. It gave no details about the amount of shares purchased.
The central bank has ordered China’s banks to hold record levels of reserves as it has sought to sponge excess liquidity out of the economy and counter inflation.
Yesterday’s close was the Shanghai benchmark’s lowest since April 2009. The index has dropped more than 16 percent so far this year.
The banks’ shares showed modest gains. ICBC rose 0.3 percent; Agricultural Bank was up 0.4 percent; Bank of China rose 0.7 percent and China Construction Bank added 0.2 percent.
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