CSF to increase purchase of smaller company shares to support stock market

BEIJING - China Securities Finance Corporation Limited (CSF), the national margin trading service provider, will purchase more shares of small- and medium-sized listed companies to ease stock market liquidity, the country's top securities watchdog said Wednesday.

The CSF will also continue to maintain the stability of blue-chip stocks and offer abundant liquidity supply for securities brokers, said Deng Ge, a spokesperson for the China Securities Regulatory Commission (CSRC).

The moves were aimed at helping market transactions resume to normal as "investors' panic and irrational sell-off caused a liquidity strain on the stock market," according to Deng.

China's stock market has been in a downward spiral since hitting a peak in June, with the benchmark Shanghai Composite Index shedding more than 30 percent.

The government has rolled out a streak of supportive measures, including asking 21 major securities brokers to spend 128 billion yuan ($20.61 billion) on exchange traded funds (ETF) that track the performance of blue chip stocks on Monday.

Those brokers are in normal and sound operation with plenty of capital and liquidity, Deng said, noting that the CSF will provide ample liquidity support for them.

The total net assets of the 21 securities firms now exceed 800 billion yuan, while their combined net capital and high-quality liquid assets both stand above 600 billion yuan, he said.