The Central Huijin Investment Co., Ltd., an investment arm of the Chinese government, said Thursday it would buy the shares of three major Chinese lenders on the secondary market to shore up their share prices amid stock market slumps.
The company said it would buy the shares of the Industrial and Commercial Bank of China, the Bank of China and the China Construction Bank and operations had started on Thursday.
"It's a direct upward force for the market and involved industry capital," said Zhang Yong, an analyst with Great Wall Securities.
The move was to ensure the government's interest in the three lenders, support the steady operation of major state-owned financial institutions and stabilize their share prices.
"The decision was important for a stable operation of the capital market," said a China Securities Regulatory Commission (CSRC) spokesman.
Central Huijin was set up in 2002 with a mission to reform state-owned banks burdened with a high ratio of non-performing loans.
The CSRC spokesman said promoting a steady and healthy development of the country's capital market had been a strategic decision of the government. The CSRC would keep a close watch over the impact of overseas market turmoil on the domestic market.
"So far, the Chinese economy has maintained good momentum. The country's capital market was built on a solid economic foundation and enjoyed a stable institutional environment."
He said as the next move, the securities regulator would step up building fundamental market systems, improve market supervision and enforce the market's internal level-off mechanism to promote the sound development of the capital market.
(Xinhua News Agency September 19, 2008)
