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Gov't-backed firms invest in Chinese stock market

Xinhua, April 1, 2016 Adjust font size:

Three firms linked to China's foreign exchange regulator have become major shareholders of some heavyweight banks, signalling that the government is seeking to diversify its use of capital to maintain growth.

China's largest banks, the Industrial and Commercial Bank of China (ICBC) and the Bank of China (BOC), both released their annual reports on Wednesday, which revealed that Wutongshu Investment Platform Co. Ltd., a government-funded investment firm, is now a major shareholder in the two.

Wutongshu, a wholly-owned subsidiary of the State Administration of Foreign Exchange (SAFE), beefed up its investment in Chinese banks during the fourth quarter of 2015 and has taken 0.4 percent and 0.36 percent of in ICBC and BOC respectively, wrote Shanghai Securities News in an article on Thursday.

Wutongshu Investment and its two subsidiaries, Fengshan Investment and Kunteng Investment, have altogether hold a whopping 27 billion yuan (4.18 billion U.S. dollars) worth of shares in China's stocks market, according to the article.

Their intensified investment in Chinese stocks market since the fourth quarter of last year, which coincided with fluctuations on the Chinese capital market, led many to speculate that the government was attempting to stabilize the market.

The three companies have, so far, kept as low a profile as they could.

In a response to a query about Wutongshu, ICBC chair Jiang Jianqing remained elusive in his remarks and said the company will release details when necessary, according to the article.

Journalists from Shanghai Securities News visited the registered address of the three firms. They said there was no trace of them, and evidence indicates that the offices are now rented by the SAFE Investment Center.

"None of those companies are conducting business in this building, while they all have certain connections with us," said staff at the Investment Center.

It was in August 2015 when Wutongshu drew public attention for the first time, after it invested 48 billion dollars in China Development Bank and 45 billion dollars in the Export-Import Bank of China.

The recent moves of the three firms to enlarge their holdings echoed SAFE's development strategy, announced in its annual report for 2015, to increase ways to invest foreign exchange reserves.

Some companies that have these three firms as shareholders saw a surge in their shares on Thursday morning. CITIC Heavy Industries, for instance, climbed by the daily limit of 10 percent before the midday break to 5.46 yuan. Endi