Ministry of Finance: Requires Central State-Owned Financial Enterprises Not to Reduce Their Stock Holdings

　　The Ministry of Finance issued a statement indicating that the domestic stock market has recently experienced abnormal fluctuations. To promote the sustained, stable, and healthy development of the capital market and effectively safeguard the legitimate rights and interests of all types of shareholders in listed companies, the Ministry of Finance will further support the development of state-owned financial enterprises, intensify efforts to serve the real economy, provide high-quality financial services, and enhance operational performance. During periods of abnormal stock market fluctuations, while fulfilling its duties as an investor, the Ministry of Finance pledges not to reduce its holdings of shares in listed companies. It also requires centrally-managed state-owned financial enterprises not to reduce their holdings of shares in listed companies where they hold controlling stakes, and encourages these state-owned financial enterprises to increase their holdings when stock prices fall below their fair value.

　　 People's Bank of China: Supporting the Stable Development of the Stock Market

　　A spokesperson for the People's Bank of China pointed out that, to support the stable development of the stock market, the PBOC is actively assisting China Securities Finance Corporation in securing ample liquidity through various means, including interbank lending, issuance of financial bonds, collateralized financing, and borrowing from relending facilities. The PBOC will closely monitor market developments and continue to provide support to China Securities Finance Corporation via multiple channels, helping it maintain stock market stability and firmly uphold the bottom line of preventing systemic and regional financial risks.

　　 SASAC: Supports Central Enterprises in Increasing Their Holdings of Listed Company Stocks

　　The State-owned Assets Supervision and Administration Commission (SASAC) stated that, in order to maintain market stability, foster a favorable market environment for enterprise reform and development, and protect the legitimate rights and interests of all types of investors, SASAC requires all relevant central enterprises to bravely shoulder their social responsibilities and act as responsible shareholders. During periods of abnormal stock market fluctuations, these enterprises must refrain from reducing their holdings of shares in listed companies they control. SASAC supports central enterprises in increasing their holdings of shares in listed companies whose stock prices have deviated from their intrinsic value, and is committed to helping stabilize the share prices of these listed companies.

△ Screenshot of the SASAC announcement

　　 111 central state-owned enterprises pledge not to reduce their stock holdings.

　　All central enterprises under the supervision of the State-owned Assets Supervision and Administration Commission have also issued commitment letters, pledging to take the following measures jointly to safeguard the stability of the capital market:

　　1. Actively shoulder social responsibilities and be a responsible shareholder. During periods of abnormal stock market fluctuations, refrain from reducing holdings of shares in listed companies that we control.

　　II. Increase efforts to increase holdings of shares in listed companies controlled by central state-owned enterprises whose stock prices have significantly deviated from their intrinsic value, and strive to maintain the stability of these listed companies’ stock prices.

　　Third, continue to adopt measures such as asset restructuring and equity investment nurturing to focus on enhancing the quality of listed companies, support the listed companies under our control in accelerating their transformation, upgrading, and structural adjustments, establish and improve a long-term mechanism for investor returns, and continuously raise the level of investor returns.

　　 CSRC: China Securities Finance Corporation Increases Its Purchases of Small- and Mid-Cap Stocks.

　　The spokesperson for the China Securities Regulatory Commission stated that currently, panic is spreading in the stock market, and irrational selling has surged dramatically, leading to a tightening of liquidity in the stock market. To restore normal trading conditions, China Securities Finance Corporation will, while continuing to stabilize blue-chip stocks, step up its purchases of small- and mid-cap stocks.

　　China Securities Finance Corporation also provided credit lines totaling 260 billion yuan to 21 securities companies through stock pledging, enabling these firms to increase their holdings of stocks for their own accounts.

　　Starting from the settlement on July 8, the China Financial Futures Exchange will raise the margin requirement for short positions in the CSI 500 Index Futures to 20% (excluding hedging positions). Starting from the settlement on July 9, the margin requirement for short positions in the CSI 500 Index Futures will be further increased to 30% (excluding hedging positions).

　　 CSRC: Encourages major shareholders and others to increase their holdings; restricts share reductions.

　　In addition, the CSRC has issued a notice supporting controlling shareholders of listed companies, shareholders holding more than 5% of the shares, as well as directors, supervisors, and senior management personnel in stabilizing stock prices by increasing their holdings of the company’s shares. Furthermore, starting from today and for a period of six months, controlling shareholders of listed companies, shareholders holding more than 5% of the shares, and directors, supervisors, and senior management personnel are prohibited from reducing their holdings of the company’s shares through the secondary market. Should major shareholders and directors, supervisors, and senior management personnel of listed companies violate these regulations and reduce their holdings of the company’s shares, the CSRC will impose strict disciplinary measures.

　　 CBIRC: Raising the Regulatory Ratio for Insurance Funds' Investment in Blue-Chip Stocks

　　The China Insurance Regulatory Commission issued the "Notice on Matters Relating to Raising the Regulatory Ratio for Insurance Funds' Investment in Blue-Chip Stocks," thereby relaxing the regulatory ratio for insurance funds' investment in blue-chip stocks. For insurance companies that meet the relevant criteria, the upper limit on the proportion of investments in any single blue-chip stock will be adjusted from 5% to 10% of total assets at the end of the previous quarter. If an insurance company's investment in equity assets has already reached the 30% cap, it may further increase its holdings of blue-chip stocks, provided that after such increase, the balance of equity assets does not exceed 40% of total assets at the end of the previous quarter.

　　Blue-chip stocks invested in by insurance funds shall comply with relevant regulations on equity investments by insurance funds, be listed and traded on the main board within China, have a market capitalization of no less than 20 billion RMB, and feature a relatively high cash dividend ratio and a stable dividend yield.

　　 China Association of Listed Companies: Calls on Listed Companies to Increase Their Stock Holdings Through Multiple Channels

　　On the 8th, the China Association of Listed Companies, together with 32 local associations of listed companies, issued an initiative calling on its listed company members to increase their stock holdings through multiple channels in order to stabilize share prices.

　　The China Association of Listed Companies urges all its listed company members, within the scope permitted by laws and regulations and in accordance with the latest rules issued by regulatory authorities, to actively adopt measures tailored to their specific circumstances—such as share buybacks by the company itself, increased shareholdings by major shareholders, employee stock ownership plans, and temporary suspension of share sales by senior executives—to stabilize the company’s stock price and effectively safeguard the long-term interests of all shareholders.

　　The initiative calls for listed companies to further enhance information disclosure by providing truthful, accurate, timely, and complete company information, and promptly clarifying any false rumors. It also urges companies to deepen innovation and development, focus on their core business operations, optimize investor returns, and increase the attractiveness of long-term value investing. Additionally, it emphasizes strengthening investor relations management to bolster investors’ confidence.

News Highlights:

　　 Sinopec Corporation received an additional 46 million shares from its controlling shareholder.

　　On the 8th, China Petrochemical Corporation issued an announcement stating that it had received notice from its controlling shareholder, China Petrochemical Group Company, that on the same day, through the trading system of the Shanghai Stock Exchange, Sinopec Group had increased its holdings of the company’s A-shares by 46 million shares in the secondary market via purchases, representing approximately 0.04% of the company’s total issued shares.

　　 Shenhua Group increases its stake in China Shenhua by over 8 million shares.

　　China Shenhua Energy Co., Ltd. issued an announcement on the 8th stating that the company had received notice from its controlling shareholder, Shenhua Group Co., Ltd., that Shenhua Group had increased its stake in the company’s shares through the securities trading system of the Shanghai Stock Exchange. According to the announcement, on July 8, 2015, Shenhua Group acquired an additional 80,245,050 A-shares of the company via the securities trading system of the Shanghai Stock Exchange by purchasing them.

　　 Major shareholders of several banks have pledged not to reduce their shareholdings.

　　In addition, on the evening of the 8th, five state-owned commercial banks—including the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China, the China Construction Bank, and the Bank of Communications—as well as joint-stock commercial banks such as Everbright and CITIC, issued announcements stating that they had received notice from their major shareholders or actual controllers, including the Ministry of Finance and Huijin Company, pledging not to reduce their holdings of shares in these banks.