Chinese state-owned investment company Central Huijin Investment Ltd. has increased holdings in four major lenders in China, according to announcements by the banks released on Wednesday.

Specifically, Central Huijin bought 37.27 million shares in the Agricultural Bank of China (ABC), 27.61 million shares in the Industrial and Commercial Bank of China (ICBC), increased stakes in the Bank of China (BOC) by 24.89 million shares and the China Construction Bank (CCB) by 18.38 million shares.

According to the announcements, Central Huijin will continue purchasing more shares of the four banks in the secondary market in the next six months.

Headquartered in Beijing, Central Huijin Investment was established in 2003 and mandated to exercise the rights and obligations of an investor in major state-owned financial enterprises. According to Shanghai Securities News, the last time Central Huijin Investment increased holdings in the four major banks can be traced back to 2015.

Analysts: Bank share injection sends positive sign for capital market

Market observers said that the boost in shares from the state fund sends a clear positive signal and helps boost confidence in the capital market.

Hong Hao, chief economist at GROW Investment Group, believes that although this round of buying only increased Central Huijin Investment's holdings in each of the four major banks by 0.1 percent, totaling 477 million yuan ($65 million), it represents recognition of the undervaluation of the banking sector.

The buying sends a "strong top-down signal" that helps boost market confidence, Hong wrote in a post on social media.

Shanghai Securities News reported that CITIC Securities believes that pressure on bank stock valuations has gradually eased, and expectations for net interest margins have become clearer, since the third quarter this year.

CITIC added that there is also the possibility that the state fund may continue to increase holdings in other financial stocks or individual market stocks, which could further boost market confidence and attract additional funds.

Wang Yifeng, chief financial analyst at Everbright Securities, stated that Central Huijin Investment increased holdings send a positive signal that helps stabilize the capital market, reflecting shareholders' confidence in these state-owned financial institutions, reported Shanghai Securities News.

Qu Qiang, a research fellow at Beijing Foreign Studies University, believes that Central Huijin's recent actions indicate that the four banks are highly profitable businesses and that their stock prices are currently undervalued, making it a favorable time to invest.

(With input from Xinhua)