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(Bloomberg) — Chinese stock benchmarks rallied in afternoon trading, with volume surging in some major exchange-traded funds (ETFs), prompting speculation that buying by state-run funds could be behind the reversal. is increasing.
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The Huatai Pine Bridge CSI 300 ETF’s trading value soared to 15.3 billion yuan ($2.1 billion) on Thursday, the highest since 2015, while the Harvest CSI 300 Index ETF and E-Fund CSI 300 ETF’s trading volume also showed abnormal A sharp increase was recorded. This coincided with gains in the CSI 300 index of mainland stocks, which closed 1.4% higher after falling as much as 1.8%.
“The national team is likely moving to stabilize the market, as it has done during past market crashes,” said Marvin Chen, a strategist at Bloomberg Intelligence.
Foreign investors were net sellers of mainland stocks again, the most in more than a year, after selling 13 billion yuan ($1.8 billion) worth of shares in the previous session.
Read: The decline in Chinese stocks shows no signs of slowing down as risks mount
The unusual advance in Chinese economic data came after the decline continued into the new year amid skepticism about the economy. The latest economic data shows the country’s real estate crisis is deepening, while geopolitical tensions with the United States and the vagaries of Chinese government policy continue to spook investors.
The Hang Seng China Enterprise Stock Index closed 0.8% higher, reversing the previous day’s 0.6% decline. It has fallen 10% this year, making the HSCEI gauge the world’s worst-performing major index.
It was suspected that sovereign wealth funds, which intervened to rescue the market during previous market downturns, were behind the increased volume in these ETFs. For example, sovereign wealth fund Central Investing Limited bought an undisclosed amount of ETFs in October and vowed to continue increasing its holdings.
Read: China ETF record volume fuels state buying speculation
However, this ETF-led stock market rally lasted only a few days. Investors say such moves may help improve short-term sentiment, but they do little to solve the underlying problems plaguing the market.
(Updates the closing price.)
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