Bloomberg News

China Brokers May Start Stock Buyback Plan, Securities Says

October 19, 2011

(Adds analyst quote in third paragraph.)

Oct. 19 (Bloomberg) -- Citic Securities Co., Haitong Securities Co., and China Galaxy Securities Co. may be the first brokerages to start share repurchase trading under a Shanghai stock exchange trial program, China Securities Journal reported today, citing an unidentified person.

Investors will be allowed to sell their stocks to brokerages and buy them back at a pre-determined price after a specific time period, according to the newspaper.

“The move will ease liquidity in the stock market, meet companies’ funding needs and boost brokerages’ income, killing several birds with one stone,” said Tu Jun, a strategist at Shanghai Securities Co. “It will benefit the overall market.”

The credit crunch and tigher monetary policies have driven down the benchmark Shanghai Composite Index 15 percent this year. China raised interest rates three times and ordered lenders to set aside more deposits to curb inflation. The gauge added 0.4 percent to 2,392.74 as of 9:51 a.m. Shanghai time.

The minimum transaction would be 100,000 shares, or 1 million yuan, with the maximum share buyback period capped at 12 months, Reuters reported yesterday, citing three unidentified people familiar with the matter. The proposal has been submitted to the China Securities Regulatory Commission for approval, Reuters said.

Li Bosi, a company spokesman at Galaxy, and Jin Xiaobin, Haitong’s board secretary, didn’t immediately answer calls to their offices. Citic’s board secretary Zheng Jing was in a meeting and was not immediately available to comment.

--Irene Shen. With assistance from Jiang Jianguo in Shanghai. Editors: Allen Wan, Stephanie Wong

To contact the reporter on this story: Irene Shen in Shanghai at ishen4@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net


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