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Buy-back boom in stock market

By Yu Hongyan (chinadaily.com.cn)
Updated: 2008-09-24 22:24

Substantial shareholders of seven listed companies raised their stake in subsidiary companies on Tuesday, following China National Petroleum Corporation (CNPC)'s move to buy more stocks of its Shanghai listed subsidiary, PetroChina Co Ltd.

As released in the announcement, China Coal Energy's controlling shareholder and parent company China National Coal Group Corp (China Coal), purchased 4.0499 million shares in Shanghai Stock Exchange, taking ownership of 57.55 percent of the issued shares.

Substantial shareholders of six other companies also joined the buying, with their business scope ranging from dairy, property, hi-tech and pharmacy. The transaction volumes were all beyond 100,000.shares.

All the substantial shareholders conveyed that they would keep buying their subsidiaries' shares over the following 12 months, and the increased stake would not exceed 2 percent of the overall issued shares as required by the State-owned Assets Supervision and Administration Commission (SASAC), the country's state assets regulator.

The commission officially expressed its support for State-owned enterprises (SOEs) to buy more stocks of their listed subsidiaries last week, to boost the sluggish domestic financial market amid global financial turmoil, as SOE subsidiaries account for 18 percent of the overall listed companies in the market. And the China Securities Regulatory Commission (CSRC) revised the regulations on the takeover of listed companies, and Shanghai Stock Exchange also implemented guidelines for shareholders and persons acting in concert late last month.

In response to the SASAC's call to stabilize the stock market, substantial shareholders or persons in concert of 23 listed companies had injected 480 million yuan ($70.31 million) in the stock market by September 19.

These substantial shareholders and persons in concert are estimated to reap more than 80 million yuan, with an earnings ratio up to 16.67 percent, thanks to the governmental stimulus package last Thursday, through cancellation of the stamp tax on stock purchases, the sovereign wealth fund injected in the country's top three commercial banks, and SASAC's support on SOEs' takeover acts.