Hong Kong () - The four China banks that were the target of share accumulation by the investment arm of China’s sovereign wealth fund saw their collective market capitalization leap on Tuesday, spurring analyst skepticism about whether the gains would last.
China's sovereign-wealth fund bought shares of the country's banks, which have been caught in a selloff, resulting in a boost in bank stocks. Wal-Mart was ordered to close some stores in China for allegedly mislabeling ordinary pork as organic.
The four banks saw their Hong Kong-listed H shares rise in value K$139.63 billion ($17.94 billion), according to calculations by Dow Jones Newswires, based on price changes in the morning session.
Much of the rally appears driven by news that Central Huijin Investment increased its holdings in the four banks.
Collectively, the sovereign wealth fund invested 200 million yuan ($31.45 million) buying stakes in the four lenders’ Shanghai-listed A shares on Monday, according to filings by the banks to Hong Kong securities regulators late Monday
Analysts at Capital Economics said the sustainability of China market rallies in the wake of announcements by China’s sovereign wealth fund had a mixed record.
News of its previous intervention in September 2008 saw the Shanghai Composite surge 9.8% in the following session. But a little more than a month later the index was below its pre-intervention level, said Capital Economics’ analysts.
The intervention ultimately did mark a low point in the Shanghai Composite’s V-shaped recovery, but Capital Economics analyst Mark Williams said the rally that followed occurred because of the later “announcement of massive fiscal stimulus.”
According to filings late Monday, China’s sovereign wealth fund bought stakes in four lenders: Agricultural Bank of China Ltd HK:1288 +12.83% CN:601288 +2.02% , Bank of China Ltd HK:3988 +7.72% CN:601988 +2.09% , Industrial & Commercial Bank of China Ltd. HK:1288 +12.83% CN:601398 +1.50% and China Construction Bank HK:939 +5.80%