This followed an order on Wednesday that these companies were not to sell any stocks during this “period of share market volatility”.
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The move comes after another day of panic sales on Chinese markets on Wednesday, which seen the benchmark Shanghai Composite Index closing down 5.9 percent, while the CSI300 index fell 6.8 percent.
By 11:30 a.m. local time, the Shanghai Composite Index had climbed forty points after trembling around 3,500, which is roughly where it closed on Wednesday evening.
The government is doing everything it can to rescue the markets.
The securities regulator said on Thursday the Securities Finance Corp would also use money to subscribe to mutual funds.
Beijing’s interventionist response has raised questions about its ability to enact the market liberalisation steps that are a centrepiece of its economic reform agenda.
“For us the situation in China is more worrying”, said Indonesian Vice President Joseph Kalla. The boom began after state media said a year ago stocks were cheap, which led investors to believe Beijing would prevent prices from falling.
China’s Securities Finance Corporation said it would do this through measures including inter-bank lending, mortgage financing and floating financial bonds.
Analysts say the resulting deep correction has been mainly triggered by new restrictions on margin trading – a practice that magnifies both profits and losses – and accelerated by concern about overvaluations.
Meanwhile, BofA Merrill Lynch warned there is a risk of financial crisis in China as companies scrambled to escape the rout by having their shares suspended and indexes plunged after Beijing had struggled for more than a week to intervene.
The lack of access has made it difficult for investors, including USA fund managers, to get exposure to the Chinese stock market. On Monday, the flagship Communist Party newspaper, People’s Daily, said the economy can main steady growth and provide “solid fundamentals” for “healthy development of capital markets”.
Growing hopes of a potential Greek bailout deal that will allow the country to stay in the euro helped European stock markets rally hard Thursday. According to the newspaper China Business News, the latest percentage is the equivalent of 37 million households.
China’s sell-off has been felt in commodities and other markets.
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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. While foreigners and domestic institutions bought shares in large companies with fairly stable businesses, working-class and middle-class families mainly bought low-cost shares in small and medium-size companies, and kept buying these shares simply because they were rising. The Shanghai and Shenzhen stock exchanges suspended 28 pending initial public offerings and said that all deposits paid for shares would be returned to the would-be buyers, freeing up cash that could be invested in existing stocks.
