Signs are emerging that a record 10-week losing streak for China’s benchmark stock index has prompted state-backed funds to step up their presence in the market.
Inflows into a basket of exchange-traded funds favored by the so-called National Team last week surged to the highest since July, according to data compiled by Bloomberg. While there’s no official confirmation that state funds are boosting purchases, the size and timing of the flows have many market participants convinced that Beijing is looking to support the market.
The latest buying bears the hallmarks of large institutions moving against the market’s decline, according to China Securities Co. analysts including Yao Ziwei. They cited persistent large inflows last week, their concentration in leading broad-based ETFs and heavier trading near the close as reasons in a note.
The benchmark CSI 300 Index slumped 3.4% in the five sessions through Friday, extending its losing run to an unprecedented 10 weeks. It was up 0.3% on Monday as data showed China’s growth accelerated more than expected in the third quarter. Still down about 17% from a June peak, the index is approaching a technical bear market.
Chinese firms have emerged as the biggest losers of the faltering global AI trade, a setback for Beijing’s efforts to use stock markets to supercharge its ambition of technological supremacy. The Nasdaq-style Star 50 Index has tumbled nearly 40% in the current half year, becoming the world’s worst-performing major tech gauge.
Beijing in July mounted one of its broadest efforts in years to steady the stock market, with regulators, state-backed investors, insurers and asset managers all moving to shore up confidence after a selloff in tech shares.
One of the national team’s favorite blue-chip ETFs drew a record inflow on Thursday, when a global tech selloff spilled into China’s market.
“The latest influx of large-scale funds provides a good opportunity for major institutions to build positions in A-shares on weakness, while also helping restore investor confidence and stabilize market expectations,” the China Securities’ analysts wrote.
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