Haitong Securities said it will buy back its own shares listed in Shanghai and Hong Kong bourses worth 21.6 billion yuan ($3.5 billion) as part of an effort to help stabilize the stock markets in both territories, which came under heavy selling pressure in the last three weeks, especially in China.
The Chinese broker will buy it’s Shanghai-listed shares at 18.80 yuan apiece, while its Hong Kong-listed stocks will be bought at 17.18 Hong Kong dollars a share, Haitong said in a disclosure to the stock exchange in the former British colony Thursday.
“The board (of directors) believe that the share repurchase is in the interest of the company and its shareholders as a whole, and it will help to enhance the investors’ confidence in the market and enhance the long-term incentive mechanism of the company,” Haitong told the stock exchange.
The Chinese government has encouraged companies to buy shares to boost the market, and discouraged them from selling. It has tried a host of measures — from cutting the central bank’s key rates to backing up share purchases of investors through liquidity support from the PBOC — but the market continues its downward trend.
While Haitong and others (Chinese developer China Vankee on July 6 said it will buy back 10 billion yuan shares) opt to support the market by buying back their shares in the market, others chose to shield themselves from the worsening rout by seeking a trading suspension.
According to media reports, almost half of the firms listed in Shanghai and Shenzhen are now frozen.
Photo credit: Jessie Wang via Flickr