BEIJING (AP) - In a flurry of new moves to halt a stock market slide, China's government on Wednesday told state-owned companies to buy shares, raised the amount of equities insurance companies can hold and promised more credit to finance trading.
BEIJING (AP) — In a flurry of new moves to halt a stock market slide, China's government on Wednesday told state-owned companies to buy shares, raised the amount of equities insurance companies can hold and promised more credit to finance trading.
The latest orders come after emergency measures announced last weekend failed to halt a slump in which China's main market index decline by nearly 30 percent since early June. That has prompted hundreds of companies to halt trading in their shares after prices of some fell by up to 50 percent.
The Cabinet agency that oversees China's biggest state-owned companies said it had told them not to sell shares and to buy more "in order to safeguard market stability."
The China Securities Regulatory Commission said the amount of their assets Chinese insurers are allowed to invest in stocks will be increased to 40 percent from 30 percent. The agency said the amount of a single blue-chip company's shares that an insurance company can buy will be increased to 10 percent from 5 percent.
The central bank said it will provide "ample liquidity to support stock market stability" through a government-owned company that lends to brokerages to finance share purchases, a practice known as margin lending. The People's Bank of China gave no indication how much money it might inject into the system.
The central bank statement was read on state TV's national midday news.
The emergency measures announced so far are aimed at shoring up the prices of shares in major state-owned companies, while those of smaller and private companies have received little support.
The weekend announcements included a pledge by state-owned brokerages to buy "blue-chip" stocks, or shares in major state companies.
That helped to boost prices this week of major companies such as PetroChina Ltd., Asia's biggest oil and gas producer. But shares in smaller companies have fallen.
That has prompted hundreds of companies to ask China's two exchanges to suspend trading in their shares after prices of some fell by more than 50 percent.
Some 787 companies had suspended trading on the exchanges in Shanghai and the southern city of Shenzhen as of the end of trading on Tuesday, the website of the prominent business newspaper China Business News reported. It said more asked to be suspended later Tuesday, raising the total to more than 1,000.