SHANGHAI, Oct 12 (Reuters) - Central Huijin, an arm of China's $200 billion sovereign wealth fund, has revived a scheme to buy Shanghai-traded A shares in the country's three biggest listed banks, offering fresh signs of government support for the stock market.
Huijin, the parent of Industrial and Commercial Bank of China (ICBC), Bank of China and China Construction Bank (CCB), has recently bought additional shares in the three and will continue to do so over the next 12 months, the lenders said on Monday.
"Huijin's continued and firmer commitment to share purchases shows that the central government is determined to support the stock market," Guosen Securities analyst Qiu Zhicheng said.
"This is good news for the banking sector and also a sign that Huijin thinks the three big banks have good investment value."
Last month, the banks said Huijin had completed a year-long share-buying scheme that had been kicked off on Sept. 23, 2008, to bolster share prices and halt a stock market slump during the worst of the global financial crisis.
Huijin is reviving its share-purchase programme at a time when 236 billion A shares of ICBC, or 70 percent of its total share capital, are due to become tradeable on Oct. 27 after the expiry of a lock-up period, threatening a stock market that is already down 16 percent from its August peak, due in large part toÂ
LOCK-UP EXPIRES
The Shanghai-listed shares of ICBC and CCB ended the morning session up nearly 2 percent after the announcement, while Bank of China gained 0.75 percent. The benchmark Shanghai Composite Index .SSEC edged up 0.26 percent.
Of the 236 billion ICBC shares due to become tradeable this month, half are owned by Huijin and half by China's Ministry of Finance.
Huijin's plan to buy more ICBC shares helped ease fears that the expiry of the three-year lock-up could bring a massive amount of new shares to the market, analysts said.
ICBC trades at 14.66 times its 2008 earnings, versus price-to-earnings ratios of 16.24 for Bank of China and 15.1 for CCB. The Shanghai Composite Index trades at a P/E ratio of 23.64.
Chinese banks have made record loans this year to support the government's 4 trillion yuan ($586 billion) stimulus plan, but have been hit by thinner profit margins from stiff competition.Â
Huijin's latest purchase included 30 million ICBC shares, boosting its stake to 35.42 percent from 35.41 percent, ICBC said on Monday.
Huijin has also bought 5.1 million shares in Bank of China, increasing its stake to 67.5 percent, and 16.1 million shares in CCB, increasing its holding to 57.09 percent.
The banks did not say how much Huijin spent to buy the additional shares.
