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The fund, often referred to as the “national team,” has bought 70 billion yuan ($9.8 billion) worth of local stocks in the past month, according to Goldman Sachs estimates. Wall Street banks said state-owned enterprises and central banks were among the possible players, while sovereign wealth funds separately confirmed the action.
President Xi Jinping will receive a briefing from Chinese regulators on the state of financial markets, Bloomberg reported, citing anonymous sources. The newspaper said the press conference would highlight “the Chinese government’s urgency to support plummeting stock prices.” This report has not been confirmed or denied.
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Hong Kong stock market falls below the 15,000 yen level, the lowest in 15 months
Hong Kong stock market falls below the 15,000 yen level, the lowest in 15 months
China’s CSI300 index, which tracks the 300 largest companies listed on the Shanghai and Shenzhen stock exchanges, added to earlier gains, closing 3.5% higher on Tuesday. The Hang Seng China Enterprise Index, which covers 50 major mainland companies, rose 4.9% to its highest level since March 2023.
The CSI300 index has fallen 38% since January 2021, hitting a five-year low in trading earlier this week as the economy slumps, as heightened regulatory scrutiny brings back memories of the US$5 trillion collapse in 2015. .
China’s overall land market has lost US$3.1 trillion in the recent losing streak, with Hong Kong wiping out an additional US$2 trillion, according to Bloomberg data.
“While government purchases may help break the downward spiral, we believe a revaluation of Chinese stocks requires reforms, policy coherence, and a plan to address structural macro headwinds,” Wall said. City Bank said in a report. It added that at least 200 billion yuan, or nearly 1% of market float, could be needed to effectively stabilize the market.
In the 2015 episode, Chinese stocks fell more than 40% from June to August of that year, wiping out $5 trillion worth of value. The bubble burst when market regulators cracked down on illegal leveraged trading. The bull market is crucial for China’s slowing economy, with China’s market capitalization falling to about 54% of domestic output from a record high of 79% in 2021 and 67% in 2015, according to CEIC data. .
This year’s recession has similarly sent the China Securities Regulatory Commission (CSRC) into overdrive mode. On Sunday, it vowed to implement further market stabilization measures, maintain stable expectations and confidence, and deal with abnormal market fluctuations. Recently, semiconductor development company Beijing Zuojiang Technology was arrested for false reporting.
The statement follows last month’s move to ban major shareholders from lending their shares to others to short the market, and issued new warnings against fraud. The CSRC also banned large brokerages from facilitating cross-border derivatives transactions that perpetuated the decline, Reuters reported on Monday, citing anonymous sources.
Shares fell amid “chronic disappointment” among global funds. They withdrew a record 201 billion yuan from the A-share market for six consecutive months through January.
“Without strong policy intervention, deflationary expectations could become entrenched and begin to negatively impact consumption and investment demand,” said Jean Ma and Phoebe Feng, analysts at the New York-based Institute of International Finance. “There is,” he said. “As seen in the past few years, Beijing’s intervention is prone to errors. Domestic and foreign investor confidence remains very weak.”
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