Central Huijin Investment Co increases holdings in China’s A-share market ETFs
Published: Feb 06, 2024 11:03 AM
Investors are closely monitoring the closing stock market trends for the day on February 5, 2024 in Yantai, Shandong Province. Photo: VCG

Investors are closely monitoring the closing stock market trends for the day on February 5, 2024 in Yantai, Shandong Province. Photo: VCG

China's state-owned Central Huijin Investment Co, a key player in China's investment landscape, has pledged to ramp up investment in the country's A-share market, signaling a vote of confidence in Chinese equities.

The investment giant announced its plans to broaden and deepen its holdings in major Exchange-Traded Funds (ETFs), a move aimed at bolstering the stability and healthy operation of the A-share market.

The announcement comes on the heels of a challenging Monday for the A-share market, which saw a significant dip, falling below the 2,650-point and hitting a five-year low.

However, a rebound was seen by Tuesday morning, with the Shenzhen Component Index and the ChiNext Index both surging over 3 percent on the back of accelerated market support policies. As of 10 am, the Shenzhen Component Index reclaimed the 8,200-point level, while the Shanghai Composite Index rose by 0.41 percent. Over 2,100 individual stocks have rallied.

Central Huijin's strategic investments are focused on key state-owned financial enterprises, representing the state in exercising shareholder rights and obligations. The firm is dedicated to preserving and enhancing the value of state-owned financial assets, avoiding commercial activities unrelated to its mandate, or intervening in the daily management of its portfolio companies, according to the company's official website.

Recent market data underscores the trend toward investing in major ETFs, with funds experiencing a net inflow of 48.5 billion yuan ($6.74 billion) on Monday. High-volume purchases were notable in specific funds, including the Southern CSI 500 ETF and CSI 1000 ETF, which saw unprecedented single-day buying sprees.

The China Securities Regulatory Commission (CSRC) has voiced its support for Central Huijin's proactive investment approach, highlighting the A-share market's current low valuation and its potential for medium to long-term investment.

CSRC stated that it is committed to facilitating Central Huijin's market operations and is actively encouraging a broader spectrum of institutional investors to increase their market participation. This includes public and private funds, securities and insurance companies, and pension funds, among others. The CSRC's efforts are aimed at attracting more capital to the market, supporting company buybacks, to shore up Chinese equities.