Where China’s National Team is Losing its Billions

Published Tuesday 3rd November 11:30 HKT

  • Spent at least 1.23 trillion yuan to stabilise the market, investing in half of A-shares
  • Book loss estimated at 213 billion yuan (US$34 billion) by end of October
  • Biggest book loss in Ping An, around 28.9 billion yuan (US$4.6 billion)

  
The Paper compiled data from company reports in Wind which reveal the extent of the ‘National Team’ intervention in the Chinese stockmarket during the third quarter. The National Team stabilisation operations began in July via two government institutions, Central Huijin Investment Ltd. (Huijin 中央汇金投资有限责任公司) and China Securities Finance Corporation Ltd. (CSF 中国证券金融股份有限公司).

On August 14th the China Securities Regulatory Commission (CSRC 证监会) announced it would cease automatic interventions to prop up the market, but in the short term, would not sell out positions.

49% of A-shares

In all the National Team were listed amongst the top ten shareholders for 1,365 A-shares (49% of A-shares), in the following exchanges:

  • Shanghai Stock Exchange (561)
  • Shenzhen Stock Exchange – Main Board (233)
  • Shenzhen Stock Exchange – SME Board (354)
  • Shenzhen Stock Exchange – ChiNext (217)

The National Team invested at least 1.23 trillion yuan (US$195 billion) based on the average price of each holding from July to August 14th. This real amount is likely higher as these figures do not include those companies Huijin and CSF already had holdings in to start with, nor those companies where either institution has smaller holdings in that do not make the top ten list of shareholders. 

Small cap profits

During the first phase of stockmarket intervention, the National Team focused on blue chips, later switching to smaller firms. If they had switched earlier to the new economy shares perhaps they would not be sitting on so many losses right now. Below are examples of some paper profits from investments in small cap stocks, all on the Shenzhen exchanges.

  • East Money Information RMB 1.670 billion
  • BYD Auto RMB 1.401 billion
  • HiThink RoyalFlush Information RMB 1.396 billion
  • Leshi Internet & Information Technology RMB 1.339 billion
  • Siasun Robot & Automation RMB 1.204 billion

Big bank losses

The Paper took the closing prices on October 30th to calculate overall profit or loss for National Team holdings. As the National Team holdings have a heavy weighting in the banking sector, the biggest paper losses can be found there. The largest loss is in Ping An, down by a whopping 28.9 billion yuan (US$4.6 billion).

Full list of holdings and losses can be found in Chinese here.

(Article not to be copied or reproduced without permission).

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