Share buyback plan to cost Baosteel 5b yuan

Securities regulator says transaction will help boost investor confidence

Baoshan Iron and Steel Co Ltd, the country's biggest steelmaker, plans to spend 5 billion yuan ($786.88 million) to buy back its own shares for no more than 5 yuan a share.

The decision comes after the company's stock value declined to a new low and will make the Shanghai-based steelmaker, commonly known as Baosteel, the country's first blue-chip company to buy back its own shares this year. Analysts have said they expect other companies in the same league to soon conduct similar transactions.

Baosteel said it plans to buy back 1 billion of its shares, or 22.8 percent of its publicly traded shares.

In a statement issued to the Shanghai Stock Exchange on Monday, the company said the share buyback is being undertaken "with a view toward safeguarding the interests of shareholders, increasing the confidence of investors and maintaining the company's share price".

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