China’s US$1.35 trillion sovereign fund boosts stake in Big Four banks, fuelling speculation on stock market intervention

Central Huijin Investment, which owns strategic stakes in local financial institutions, picked up additional domestic shares in Industrial and Commercial Bank, Construction Bank, Bank of China and the Agricultural Bank of China, according to stock exchange filings late on Wednesday.

The purchases, which would have cost about 477.5 million yuan (US$65.4 million) based on their closing prices on Wednesday, may be symbolic. While they only boosted Central Huijin’s shareholding in each lender by 0.01 percentage point, the wealth fund would be raising its stakes over the next six months, the banks said in their respective filings.

Vocal Chinese hedge fund urges Beijing to stabilise market, overcome stock bears

“This move, reminiscent of its actions during the 2015 Chinese equity market turmoil, signifies the government’s desire to maintain market stability,” Redmond Wong, China strategist at Saxo Capital Markets in Hong Kong, said in a note to clients. This proactive stance is expected to enhance sentiment, he added.

China’s stock market has been in the doldrums, with the CSI 300 Index losing nearly 5 per cent since the start of the year, amid disappointment with Beijing’s slow-drip approach to injecting stimulus to revive the economy as the post-Covid recovery momentum waned.

Central Huijin, a vehicle under China Investment Corp, undertakes domestic equity investments in state-owned financial institutions in China, without interfering in the daily operations of its portfolio companies. It exercises its rights and performs its obligations as a shareholder to the extent of its capital contribution, according to its website.