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China’s Central Government-Owned Companies Take Measures to Stabilize Stocks

China’s Central Government-Owned Companies Increase Holdings to Revive Stock Market

At least seven listed companies owned by China’s central government have announced plans to increase their holdings or buy back shares. This move comes as Beijing continues its efforts to stabilize the sinking stock market. Companies such as China State Construction Engineering Corp and Aluminum Corp of China have unveiled similar share purchase plans, following in the footsteps of 10 other central state-owned enterprises. These actions are part of a broader strategy that includes China’s state fund, Central Huijin Investment Ltd, increasing stakes in the country’s major banks.

Stock Market Continues to Decline Despite Positive Economic Data

The Chinese stock market, represented by the bluechip CSI300 Index, has slumped more than 2% and reached 11-month lows. This decline is attributed to heavy foreign selling, even after the release of better-than-expected economic data. Despite Beijing’s measures to boost equity market sentiment, investors remain focused on improvements in the real economy and company earnings before making long-term allocations to Chinese equities.

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Positive Outlook for Chinese Equity Market

Portfolio manager Gary Tan from Allspring Global Investments believes that the Chinese equity market is nearing its bottom due to its low valuation and increasingly appealing dividend yields. He suggests that Beijing’s efforts to boost market sentiment will have limited impact, as investors are more concerned about the real economy’s performance and company earnings. However, Tan remains optimistic about the market’s potential for recovery.

Additional Companies Join the Share Purchase Trend

Joining the wave of share purchase plans are companies such as China Shenhua Energy Co, GD Power Development Co, and China National Nuclear Power Co. These companies are following the footsteps of their peers in an attempt to stabilize their stocks and regain investor confidence.

Overall, China’s central government-owned companies are taking proactive measures to revive the sinking stock market. While the market continues to face challenges, these companies’ efforts, combined with other supportive measures, aim to restore stability and attract investors.

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