China considers $278 billion stock market bailout: report

Chinese authorities are considering a series of measures to stabilize the struggling stock market, Bloomberg News reported on Tuesday, citing people familiar with the matter. Previous attempts to restore investor confidence have failed, and Premier Li Qiang has called for “strong” measures, the report said.

The report, citing people familiar with the matter, said policymakers were planning to invest in foreign accounts, mainly those of Chinese state-owned enterprises, as part of a stabilization fund to buy domestic stocks through a Hong Kong exchange link. The government is said to be trying to mobilize 2 trillion yuan ($278 billion). On that matter. It has also secured at least 300 billion yuan of local funds to invest in domestic stocks through China Securities Finance Corporation or Central Huijin Investment Co., Ltd.

Officials are considering other options and could announce some as soon as this week if approved by top leaders. Plans are still subject to change. The China Securities Regulatory Commission did not respond to a request for comment, people familiar with the matter told Bloomberg.

The deliberations highlight a growing sense of crisis among Chinese authorities as they try to halt a slide that this week pushed the benchmark CSI300 index to its lowest point in five years. Calming individual investors, many of whom have been hit hard by the prolonged real estate recession, is also seen as key to maintaining social stability.

It is by no means certain that these measures will be enough to end the rout. According to the report, the real estate crisis, weak consumer confidence, declining foreign investment, and declining confidence in local businesses due to years of unstable policy decisions are exerting strong downward pressure on both the economy and financial markets. That’s what it means.

Past efforts to strengthen the stock market, particularly in 2015, have proven inadequate at best and sometimes counterproductive. As Bloomberg reported, authorities are also reluctant to roll out the kind of large-scale economic stimulus that many stock investors are calling for.

The report notes that more than $6 trillion has been wiped from the market capitalization of Chinese and Hong Kong stocks since peaking in 2021, highlighting the challenges facing Beijing as it seeks to stem the decline in investor confidence. highlighted.

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