Oct 10, 2012
Translated by Zhu Na

Beijing News reported yesterday that the Shanghai Stock Exchange Composite Index closed at 2115.23 points, up 1.97 percent, and the Shenzhen Component Index closed at 8743.86 points, up 2.39 percent. The transaction volume of A-shares also increased by nearly 50 percent compared to the previous trading day.

Huijin, a state-backed investment firm, helped push up financial stocks through its increased stake in bank shares. This marks the fourth consecutive quarter that Huijin has increased its holdings of bank shares.

The Industrial and Commercial Bank of China (ICBC) and Bank of China released an announcement yesterday stating that Huijin increased its stake in ICBC by 6.3 million shares and in Bank of China by 19 million shares in the third quarter.

Yesterday all 16 of the listed banks’ shares increased. ICBC’s shares increased 1.33 percent and Bank of China’s shares increased 1.11 percent.

At a meeting before the National Day holiday, the Securities Association of China revealed that the details regarding the new rules of business innovation for securities companies will be released in October. This also stimulated investors’ confidence in financial stocks.

Huijin’s increase in its holdings of bank shares has tended to be interpreted as “positive” news. However, some market analysts believe that it may not necessarily save the bank stocks. Currently Huijin’s shareholdings ratio for the four big banks is very high, but there isn’t much room for it to continue increasing its bank shares in the future. 

Guo Tianyong (郭田勇), director of the Research Center of China Banking Industry of Central University of Finance and Economics, said that the market’s concerns for listed banks’ shares come from a variety of factors. On one hand, the pressure of the macroeconomic downturn is still strong. On the other hand, reform of the market-oriented interest rate is being steadily pushed forward and the banks’ high growth might be difficult to reproduce. The market is worried about the future profitability of banks.

Links and Sources
Beijing News - 汇金“维稳” 沪指重上2100