As the disclosure of 2015 annual reports and the Q1 reports in 2016 of listed companies draws to a close, the latest shareholding of the “national team”, including Central Huijin Investment Ltd. (Central Huijin), China Securities Finance Corporation Limited (CSF) and the CSF asset management plans under various funds and excluding social insurance funds and the investment platforms under the State Administration of Foreign Exchange (SAFE), comes to spotlight.
The Securities Times on May 3 reported that the “national team” shows up on the list of top 10 shareholders of tradable shares of 1,212 companies, accounting for 43 percent of all listed companies, at the end of the first quarter. Calculation based on the closing prices on April 29 shows that the market value of shares held by the “national team” totals 2.6 trillion yuan, accounting for 7.37 percent of the market value of all tradable shares and 5.41 percent of the aggregate market value on the A-share market.
Excluding stocks which already saw high shareholding by the “national team” in the middle of last year, weighted stocks listed on the main boards, with stocks related to finance and resource included, are still preferred by the “national team”. At present, in terms of market value of the shares being held by the “national team”, Ping An Insurance (Group) Company of China, Ltd. (601318.SH; 02318.HK) ranks the highest with 46.3 billion yuan. The figure of runner-up CITIC Securities Company Limited (600030.SH; 06030.HK) records 25.2 billion yuan. Another 13 listed companies including CRRC Corporation Limited (601766.SH; 01766.HK), China State Construction Engineering Corporation Limited (601668.SH), Industrial Bank Co., Ltd. (601166.SH), Kweichow Moutai Co., Ltd. (600519.SH) and China Petroleum & Chemical Corporation (600028.SH; 00386.HK) see their shares valued at over 10 billion yuan held by the “national team”.
In terms of the proportion of shareholding, 21.99 percent shares of Tianjin Jingwei Electric Wire Co., Ltd. (300120.SZ) are held by the “national team”, still the highest among companies whose shares are held by the “national team”. Zhang Guoxiang, Dong Shulin and Zhang Qiufeng, top three shareholders of the company and also persons acting in concert, totally hold 25.91 percent of the company’s shares, which is almost the same with the proportion held by the “national team”. It is estimated that the “national team” acquired the company’s shares with 768 million yuan at the cost price of 17.06 yuan per share. In contrast to the closing price of 14.29 yuan per share before the May Day holiday, the “national team” has suffered a loss of 125 million yuan, or 16 percent.
Besides banking stocks that already see high shareholding by the “national team”, over 10 percent shares of 26 companies and over 5 percent shares of 102 companies are held by the “national team”, representing appreciable decline compared with 81 and 241 companies at the end of the third quarter of last year. But, it does not necessarily mean that the “national team” is withdrawing. It is more likely that it is making adjustment in strategy.
Seemingly, the number of companies seeing high shareholding by the “national team” is decreasing and the “national team” is delisted from the top 10 shareholders of multiple companies. Liu Shiyu, chairman of the China Securities Regulatory Commission (CSRC), straightly responded during the two sessions in 2016, referring to National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC), that “it is too early to talk about when CSF will exit from the market”.
Liu also added that “some irregular temporary measures have exited or are exiting from the market after the capital market assumes self-repair.” There is no knowledge of what these irregular temporary measures are, but the “national team” indeed has adjusted its strategy in acquiring shares.
Central Huijin transferred the shares newly acquired in the third quarter of 2015 to Central Huijin Asset Management Ltd. The latter, established on Nov. 6, 2015 with a registered capital of 5 billion yuan, is a wholly-owned subsidiary under Central Huijin and is engaged in asset management, project management and investment management.
Considering the timing when Central Huijin Asset Management is established, the company is built for taking over the shares newly acquired by Central Huijin in the third quarter of 2015, while the business scope also shows that Central Huijin Asset Management is mainly involved in asset management business. Comparison shows that the main responsibility of Central Huijin is to carry out equity investment in key state-owned financial enterprises and other businesses approved by the State Council. “Stabilizing the market” is an irregular business under special period, and it is more reasonable to transfer the shares to its subsidiary principally engaged in asset management.
Central Huijin is continuing to hand over its shareholdings to Central Huijin Asset Management. CSG Holding Co., Ltd. (000012.SZ), Telling Telecommunication Holding Co., Ltd. (000829.SZ), BaoLingBao Biology Co., Ltd. (002286.SZ) and other companies were held by Central Huijin according to their 2015 annual reports, which were held Central Huijin Asset Management in their first quarterly reports of 2016. Central Huijin is now only directly holding equities in around ten companies including Beijing Trust & Far Technology Co., Ltd. (300231.SZ), China Southern Airlines Company Limited (600029.SH) and BYD Company Limited (002592.SZ).
In addition, the “national team” is also changing in shareholdings of individual stocks. For example, three CSF asset management plans disappeared in 2015 annual report of Sino Geophysical Co., Ltd. (300191.SZ). Central Huijin is not the biggest shareholder of Guangdong Meiyan Jixiang Hydropower Co., Ltd. (600868.SH) anymore. Ten CSF asset management plans ranked among the top ten biggest shareholders of Nanjing Gaoke Company Limited (600064.SH) in the company’s third quarterly report in 2015 but three of them left in the company’s 2015 annual report.
Three investment platforms of the SAFE appeared in the shareholders lists of listed companies, which drew extensive attention from the market. The three investment platforms of the SAFE are principally engaged in investment, quite different from the “national team” which is represented by CSF and Central Huijin and aims to stabilize the market.
The three investment platforms of the SAFE include Sycamore Tree Investment Platform Co., Ltd, Beijing Fengshan Investment Co., Ltd. and Beijing Kunteng Investment Co., Ltd. Based on the first quarterly report in 2016 and 2015 annual report, these three investment platforms ranked among the top ten shareholders of tradable stocks of 23 companies listed on the main board of Shanghai Stock Exchange with state-owned assets background. The journalist of Securities Times found the market value of A shares held by the three investment platforms recorded 43,687 million yuan.
According to the 2015 annual report and the first quarterly report in 2016, Sycamore Tree Investment holds tradable stocks in six listed banks and Everbright Securities Company Limited (601788.SH). Among these companies, it holds 3.52 percent and 3.32 percent tradable stocks of Industrial Bank Co., Ltd. (601166.SH) and Shanghai Pudong Development Bank Co., Ltd. (600000.SH) respectively.
In comparison, Fengshan Investment and Kunteng Investment enjoy more extensive investment coverage. The former was exposed in the shareholders lists of 15 companies including Shanghai International Port (Group) Co., Ltd. (600018.SH), Nanjing Gaoke, Hundsun Technologies Inc. (600570.SH), etc. and the latter holds stocks in five companies including Huafa Industrial Co., Ltd. Zhuhai (600325.SH), Gemdale Corporation (600383.SH) and Liaoning Cheng Da Co., Ltd. (600739.SH).
The three investment platforms totally occupy 0.82 percent tradable shares of Everbright Securities. Fengshan Investment and Kunteng Investment totally hold 3.17 percent and 0.98 percent tradable shares of Gemdale Corporation (600383.SH) and China United Network Communications Limited (600050.SH) respectively.
It can be found after comparison that the shareholding proportion of investment platforms of SAFE is relatively low, which is no more than 1 percent except what has been mentioned before and is quite different from that of CSF. Moreover, in 2015 annual reports, Sycamore Tree Investment held 0.24 percent tradable shares of Everbright Securities and Fengshan Investment held 0.42 percent tradable shares of Jiangxi Hongdu Aviation Industry Co., Ltd. (600316.SH), but they didn’t show up in the first quarterly reports. They are unlikely to reduce the shareholding and are out of the shareholders lists due to the low shareholding proportion.
By contrast, Fengshan Investment or Kunteng Investment appeared in the first quarterly reports of nine firms including Sinolink Securities Co., Ltd. (600109.SH), Hongdu Aviation Industry and Hundsun Technologies. They didn’t rank among the top ten shareholders in the annual reports of these companies, indicating that it was probably that they bought the stocks in the fourth quarter of last year. Therefore, the number of A-share companies held by investment platforms of SAFE is supposed to be far more than this.
The number of stocks held by the investment platforms of SAFE is not completely the same with that of CSF. The number of stocks of some companies held by SAFE investment platforms is more than the stocks reduction of CSF.
(By Jennifer Lu & Vanessa Chen)
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