Templeton parent company Franklin Resources has increased its holdings in two H-share companies, even as the sector continues to take a pummelling from other market players. The US fund management group's stakes in Guangshen Railway and Catic Shenzhen Holdings have risen to 24.04 per cent and 17.01 per cent respectively. Franklin Resources is required to file a disclosure report when collective holdings among the group's funds reach 10 per cent of a Hong Kong-listed company; and then for every 1 per cent movement after that. Thus, the seeming flurry of filings in the past several weeks - including for Shanghai Petrochemical, Maanshan Iron and Steel, and Dongfang Electrical Machinery - does not necessarily indicate that one fund is betting heavily on the sector's outlook. Templeton Emerging Markets president Mark Mobius said it was probably more simply an accumulation of various stakes held by different funds in the sprawling group. 'If one of our analysts says Guangshen is a buy, then we start buying,' Mr Mobius said. 'Just in our little area - emerging markets - we have US$14 billion to invest. Let's assume we take 1 per cent [as potential investment into Hong Kong/China], that is already $140 million.' Besides the Emerging Markets group, the much larger Templeton Mutual Funds and Franklin Mutual also have funds that buy into the mainland and Hong Kong markets. H-share prices have been depressed in the wake of a run of disappointing results by the state sector companies. The H-Share Index has fallen 9.63 per cent over the past two weeks, compared with a 3.97 per cent fall in the Hang Seng Index. Heavy state industries are facing regulatory restructuring, liberalisation of price controls, and massive downsizing under Beijing's economic reforms. In the process, some companies would emerge stronger and others would collapse, one analyst said. 'Just how many steel companies does China need? That's something to look at,' he said. 'I guess in five or 10 years some of these companies won't exist. Others will be much stronger. 'If your investment horizon is long term, and you choose well, this may be a good time to get in.'