Stocks gain as companies urge workers to buy shares

SHANGHAI - Chinese mainland stocks rose on Wednesday as a growing number of listed firms encouraged employees to buy shares, and as the central bank injected more funds into the banking system to ease fears of a midyear liquidity crunch.

Hopes that Morgan Stanley's Capital Index will include China's A shares in its indexes later this month also whetted investors' appetite for big-cap stocks, with more investment banks predicting a good chance of such a move.

The Shanghai Composite Index gained 1.23 percent to 3,140.33.

Over the past week, controlling shareholders of over a dozen listed companies have called on employees to buy the companies' shares, while promising to take any losses incurred if they hold the shares for at least 12 months. The firms include Shenzhen Fengda Technology Co, Eastern Gold Jade Co and Great Wall International ACG.

Shares in those companies have jumped in response, and the optimism appears to be spreading as investors bet more companies would issue similar statements.

Unlike in the mid-2015 market crash, when a slew of State firms made buybacks, the calls this time are coming from private major shareholders of smaller companies.

Markets watchers said it was not clear if the calls to buy shares were linked to broader efforts by authorities to stabilize money and currency markets in recent weeks.

In addition, an increasing number of institutions are now betting China's A shares will be included in the MSCI's benchmark index. The decision will be made on June 20.

Reuters