The government of Shenzhen will sink over Rmb 15 billion ($2.17 billion) into a selection of local listed companies in a bid to offset the threat posed by rampant share dumping on China’s equity markets, Caixin reports.
The bailout will apply to around 30 of the southern Chinese city’s top public companies, which have begun to dump shares to meet share-backed loan payments or margin calls as stock values plummet. China’s stock indices fell to four-year lows last week, and officials are concerned share dumping will add further downward pressure.
The decision was emulated by the government of Shunde, another wealthy manufacturing area in Guangdong.
“The district government has noticed share-pledge risks and hope to help listed companies to reduce such risks,” one source told Caixin.