Central Huijing bolsters China's two lenders

(Ecns.cn)--China's State-run Central Huijing Investment Co has increased its stake in the Industrial and Commercial Bank of China (ICBC) and the Bank of China (BOC) recently, using a total of 470 million yuan (US$74.5 million), reports confirmed Wednesday.

ICBC is the world's biggest bank by market value, in which Central Huijing Investment Co has now increased its holdings by  50.5 million shares. It also added 83.6 million shares in BOC in the first quarter of this year, to bolster support for the lenders.

The average price of each share in ICBC is 4.35 yuan (US$0.69), and the total cost for the increased shares amounts to 220 million yuan (US$34.8 million), while for BOC, the investment was about 250 million yuan (US$39.6 million) with the average price of each share set at 3.01 yuan (US$0.48).

Such buying actions by Central Huijing, which was set up to hold the government's stake in the nation's biggest lenders, are usually taken by analysts as an indication that a stronger performance of the stock market is in the offing, according to the Shanghai Daily.

Last year Chinese banks' valuations fell below the level reached during the 2008-2009 global financial crisis, turning on fears that loans may sour as the economy slowed and the government maintained controls on the property market despite record profits for 2011. Earnings reports of 12 listed banks showed their combined profits reached 849 billion yuan (US$135 billion), nearly 30 percent higher than a year earlier.