Authorities in Guangdong, Zhejiang pledge more than US$2 billion to save firms that put up stock as collateral for bank loans from forced share sales
Authorities in two regions of China known as centres for private enterprise said they will make at least 15 billion yuan (US$2.16 billion) available to prevent listed companies having to sell off stock put up as collateral against bank loans.
The government of east China’s Zhejiang province, which is home to such companies as Alibaba Group – which owns the South China Morning Post – and Geely Automobile, said it would make up to 10 billion yuan available, while authorities in Shantou, a city in southern Guangdong province, said they would put 5 billion yuan on standby, according to official statements.
China’s private firms have this year suffered their worst stock market rout since 2015. All but 13 of the 3,491 companies listed on China’s two stock exchanges have pledged their equity as collateral against bank loans, according to figures from China Securities Depository and Clearing Corporation, with the total value estimated at 4.5 trillion yuan.
Zhejiang State-owned Capital Operations Co, the provincial government’s investment arm, said on Friday it would establish its fund in partnership with the provincial branch of Agricultural Bank of China and the lender’s private equity investment unit, ABC Financial Asset Investment Co.
“Many listed companies have announced that the value of stocks pledged [as equity against bank loans] had reached the level that would trigger a forced sale,” it said in a statement.
