Fri, Jun 22, 2018 - Page 10 News List

China firms to buy back shares as markets plunge

PROPPING UP:Of 101 companies that have announced such operations, 61 are listed in Shenzhen, where the benchmark index has slumped 20 percent since January

Bloomberg

A wave of Chinese companies has promised to boost buying of their own shares as a US$1.6 trillion slump in the nation’s stock market deepens.

At least 101 firms said that major shareholders and executives plan to increase their stakes or have bought shares, according to exchange filings on Wednesday and yesterday.

Stock prices for the companies dropped by an average 7 percent on Tuesday, when the Shanghai benchmark plunged to a two-year low amid concern about worsening trade tensions with the US.

The move is reminiscent of steps taken by Chinese firms during 2015, when executives scrambled to shore up confidence as a stock bubble burst.

Officials are weighing in: After Tuesday’s tumble, People’s Bank of China Governor Yi Gang (易綱) pledged to use monetary policy comprehensively and maintain liquidity at an appropriate and stable level, while state media also tried to reassure investors.

“The purchases are more of a symbolic move to boost share prices,” said Guo Feng, the Shanghai-based head of the wealth management department at Northeast Securities Co (北方證券). “It’s typical for firms to come up with such plans after market tumbles, but they hadn’t always worked.”

Property developer Guangzhou Yuetai Group Co’s (廣州粵泰集團) chairman plans to buy up to 1 billion yuan (US$154 million) of the company’s shares over the next nine months, starting yesterday, it said in a statement yesterday.

The stock plunged by the 10 percent daily limit for a third day.

Guangzhou Haige Communications Group Inc (廣州海格通信集團) on Wednesday said that its controlling shareholder plans to spend no more than 1 billion yuan buying as much as 5 percent of total shares before Aug. 10.

Of the 101 companies announcing buybacks, 61 are listed in Shenzhen, where the benchmark equity gauge has slumped 20 percent since its January high.

That includes a 1.6 percent drop yesterday.

The Shanghai Composite closed up just 0.6 percent.

A weaker yuan is adding to jitters, with the currency losing 1.6 percent over the past week.

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