China nudges listed firms, investors to buy stocks to stabilize market


HONG KONG, April 11 (Reuters) – China is encouraging long-term investors to buy more equities and major shareholders of listed firms to increase their holdings when stocks slump, in a bid to stabilize a stock market rocked by a worsening COVID-19 outbreak.

The government will also facilitate corporate financing in COVID-hit areas and urge state shareholders of listed firms to actively buy undervalued stocks, China’s securities watchdog said in a statement on its website late on Monday.

China’s benchmark CSI300 index (.CSI300) fell 3.1% on Monday, the biggest drop in a month, as a lockdown in Shanghai and other parts of the country threatens economic growth.

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The China Securities Regulatory Commission (CSRC) said in the statement that authorities will take steps to stabilize expectations of listed companies and investors.

China will encourage social security funds, pension funds, insurers, trust firms and wealth management firms to allocate more money to equity assets, and invest more in quality listed companies, the CSRC added.

The government will also improve the financing mechanism for private companies, and support corporate fundraising, acquisitions and restructurings in areas badly hit by COVID.

To boost investor confidence, CSRC said it will encourage listed firms to buy back their shares to stabilize prices. Major shareholders and senior executives are also encouraged to actively buy shares when prices fall sharply.

Meanwhile, state shareholders should actively buy undervalued stocks, and support share buy-back and cash dividend plans by listed firms, according to the statement, which was jointly published by the CSRC, China’s state assets supervisor, and the All-China Federation of Industry and Commerce.

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Reporting by Meg Shen and Ella Cao; Editing by Hugh Lawson and Himani Sarkar

Our Standards: The Thomson Reuters Trust Principles.

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