China’s Ministry of Finance has transferred its stakes in a group of financial firms to a government-controlled fund as Beijing steps up its push to overhaul the financial sector, reports South China Morning Post.

The asset reshuffle will allow Central Huijin Investment – a subsidiary of China’s sovereign wealth fund, China Investment Corporation – to take controlling stakes in five companies, which include three national asset management firms.

The move is part of Beijing’s push to improve asset quality in the financial system, analysts said, but it has also raised market expectations of further government measures to stabilise the stock market and consolidate the securities industry.

Beijing has been encouraging mergers and acquisitions in the financial sector as part of a strategy to create a group of world-class Chinese investment banks.

Central Huijin now has a total of eight securities companies under its control following the deal, with its latest acquisitions including China Cinda Asset Management, China Orient Asset Management, China Great Wall Asset Management, China Securities Finance and China Agriculture Re.

The market will be closely watching how Central Huijin integrates the firms, analysts at Citic Securities said in a note published on Sunday.

“The equity adjustment of these securities companies to put them under the umbrella of Huijin is expected to promote a new round of mergers and acquisitions in the securities industry,” said Tian Liang, an analyst at Citic Securities.

“This equity transfer is a further implementation of Beijing’s master plan for state organ institutional reform issued in March 2023.”

The plan aims to improve the management of state-owned financial assets by transferring control of market-oriented institutions supervised by the central government to state-owned asset management institutions such as Central Huijin.

President Xi Jinping set the goal of forming world-class investment banks to help China develop into a financial superpower at a central financial work conference in October 2023.

First established in 2003, Central Huijin is a leading manager of state-owned assets with a reputation for overhauling institutions to serve the real economy and earning high returns.

Central Huijin managed 6.41 trillion yuan (US$880 billion) of assets and held equity in 19 institutions as of the end of 2023, according to China Investment Corporation’s 2023 annual report, published in September 2024.

Dong Ximiao, chief researcher at the Chinese financial services firm Merchants Union Consumer Finance, predicted the asset reshuffle would drive improvements in the three asset management companies involved.

“The transfer will strengthen their professional capabilities, make their operations more market-oriented, and help them dispose of non-performing assets,” said Dong.

“In addition, Huijin will strengthen cooperation and collaboration among the financial companies it controls to integrate resources more efficiently.”