Chinese firms pour W7tr into share defense as authorities urge buying

As volatility gripped Chinese equity markets, Shanghai-listed companies poured more than 7 trillion won ($4.9 billion) into share buybacks and major shareholder stake increases over a single month to prop up their share prices. Chinese authorities also stepped in to steady investor sentiment, urging state-owned enterprises and financial institutions to buy stocks.

According to Chinese outlet Pengpai, 156 companies listed on the Shanghai Stock Exchange announced plans for share buybacks or shareholder stake expansions in July.

Eighty-nine companies disclosed buyback plans totaling 20.4 billion yuan ($3.02 billion), while 67 companies announced plans by major shareholders and executives to expand their stakes by a combined 13.7 billion yuan. Together, the two categories amount to 34.1 billion yuan.

That figure matches or exceeds the total value of buybacks and stake expansions recorded across the entire second quarter of this year, from April through June.

The wave of share-price defense measures gained momentum after the Shanghai market fell on two consecutive days — July 16 and 17 — sharply dampening investor confidence.

On July 19, two central state-owned enterprises under direct supervision of China's State Council — China Chengtong Holdings Group and China Guoxin Holdings — announced they would step up their stock purchases.

China Chengtong said it had recently bought around 10 billion yuan worth of Chinese shares through its headquarters and affiliates. China Guoxin announced it had deployed more than 50 billion yuan, including through special loans earmarked for buybacks and stake increases.

The following Monday, China's securities regulator, the China Securities Regulatory Commission, and other financial authorities issued market-stabilization statements and called on state enterprises and financial institutions to invest more actively in stocks, triggering a concentrated burst of buyback announcements.

On that day alone, 19 Shanghai-listed companies announced buyback plans totaling 4.8 billion yuan, while 10 companies disclosed plans to expand stakes by a combined 7 billion yuan.

In the week of July 20 through July 25, 51 companies announced buybacks worth 9 billion yuan and 26 companies unveiled stake-expansion plans exceeding 8 billion yuan. In the final week of July, an additional 27 companies disclosed plans to invest a combined 8.5 billion yuan.

Private-sector participation was also notable.

Battery materials maker Huayou Cobalt announced a buyback of between 600 million and 1 billion yuan, citing "share price stability" as its goal. Construction equipment maker Sany Heavy Industry said it would channel repurchased shares into an employee stock ownership program.

Pengpai said the concentration of buybacks and stake expansions on the Shanghai exchange in July reflected companies' active defensive response to market volatility as well as their confidence in long-term corporate value, adding that the coordinated action by companies and industrial capital was contributing to greater market stability.