Banking share purchase boosts China's stock market

Government buys shares in two financial blue-chips.

China's government through Central Huijin Investment Company, its main holding company for state-owned financial firms, increased its equity stakes in Everbright Bank and New China Life Insurance late last week to restore confidence in China's stock market after the key index plunged to a six-month low last week.

The shares were worth more than US$16.3 million. Sources said Central Huijin also purchased shares worth a combined US$848 million in three exchange-traded funds that invest mainly in blue-chip stocks.

Huijin purchased shares worth 0.05% of Everbright's total equity, raising its stake in the bank to 48.4%, It bought shares worth 0.06% of New China Life, increasing Huijin's total stake to 31.3%. Huijin plans to gradually raise its stakes further over the next six months.

China's benchmark CSI300 index of the Shanghai- and Shenzhen-listed shares fell to its lowest point in 2013 on June 13 before recovering slightly the next day.