(Yicai) Oct. 24 -- Central Huijin Investment purchased exchange-traded funds yesterday, after earlier this month raising its stake in the country’s Big Four banks, and will continue to do so to lift market confidence and spur a sluggish stock market, the Chinese state-owned financial investment institution said.

Buoyed by the news, the Shanghai Composite Index climbed 0.6 percent to trade at 2,958.57 as of 2.20 p.m. China time today.

Yesterday, the Shanghai Stock Exchange’s Science and Technology Innovation Board 50 Index slumped to a new low and the Shanghai Composite Index, the Shenzhen Component Index and the ChiNext Index all tumbled over 1 percent.

Although the amount purchased was not disclosed, by buying ETFs, Huijin will boost the stock markets and this will lead to a more direct and noticeable effect on the indexes, Li Zhan, chief economist of the research department at China Merchants Fund, told Yicai.

In a separate move to stabilize the stock markets, Huijin hiked its stakes in Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, and China Construction Bank on Oct. 11 and the state fund promised to continue to buy in over the next six months.

A number of other large companies, including central government-owned enterprises and brokerages, have also recently repurchased their own shares to bolster market confidence.

Oil major Sinopec bought back CNY29 million (USD4 million) of its mainland-listed stock on Oct. 17 through centralized bidding. And China Railway Construction and Power Construction Corporation of China also announced buy backs of up to CNY300 million (USD41.1 million) and CNY2.4 billion (USD328.7 million) respectively.

Established in December 2003, Huijin exercises investor rights and fulfills investor obligations for China’s central government to act as a major owner of the country’s key state-owned financial enterprises. The institute does not carry out commercial business activities nor interfere with the daily business activities of the financial enterprises it controls.

Editor: Kim Taylor