Central Huijin Investment, a unit of China’s US$1.35 trillion sovereign wealth fund, bought exchange-traded funds (ETFs) tracking underlying Chinese stocks in another bid to bolster the nation’s ailing equity market.
The purchase is the latest evidence of state buying gathering pace. This follows a slew of steps by the government to shore up stocks, from a cut in the stamp duty to restrictions on short selling and divestments by big shareholders, which has failed to restore confidence among investors.
China’s Shanghai Composite Index rose 0.5 per cent on Tuesday, rebounding from a one-year low.
Economic data that showed third-quarter growth exceeded estimates has failed to impress investors, who are instead focused on the troubled property market and the policy front that so far has remained restrained.
Nomura Holdings predicts that gross domestic product will fall below 4 per cent next year, compared with the official target of around 5 per cent for 2023.
Exits from China’s stock market add to worst capital flight since 2016: Goldman
Exits from China’s stock market add to worst capital flight since 2016: Goldman
Calls for more direct government intervention in stocks in the form of a stabilisation fund have been growing louder among some prominent investors.
Overseas investors have been a major driver of the sell-offs. They have sold about 37 billion yuan of Chinese stocks via the exchange link with Hong Kong this month, bringing the total to 164 billion yuan in almost three months, according to Bloomberg data.