Beijing is ramping up measures to halt the decline in its equity markets. Two large state-run investment firms have disclosed new stock purchases, and regulators are scheduled to gather with major market players.
The firms vowed to keep increasing their investments, particularly in companies controlled by the central government. This is the first time since last April that the two funds disclosed their buying.
In a separate development, state media reported that on Monday, the CSRC is convening a gathering whose participants will include listed firms, brokerages, and asset managers, with the aim of gathering opinions on fostering steady and sound growth of the nation's capital markets.
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These supportive actions follow a sharp decline in the world's second-biggest equity market. Last week, the CSI 300 Index fell 5.3% after a global tech stock collapse. During that period, exchange-traded funds that the National Team typically buys also experienced heavy capital inflows.
The CSI 300 is the main benchmark for Chinese stocks that trade in Shanghai and Shenzhen. The CSRC meeting Monday will be worth watching.
These state-backed funds, often referred to as the National Team, have a history of intervening during sharp downturns. The last time they publicly announced purchases was last April, a period when the CSI 300 also faced pressure. Their renewed activity signals that authorities are determined to prevent a prolonged selloff.
Historically, similar National Team buying has provided a temporary floor for stocks, though sustained rallies often depend on broader economic conditions. In previous episodes, such as during the 2015 market crash and the 2020 pandemic selloff, state funds stepped in with large purchases that stabilized prices for weeks. However, the effectiveness of these interventions has varied, and the current global tech downturn adds an external headwind that local buying alone may not fully counteract.
For anyone following Chinese markets, this is a reminder of how much power the government still has to throw around. The "National Team" funds are massive, and when they say they will keep buying, it can put a floor under prices - at least for a while.
The bottom line: China is signaling it will not let its stock market spiral. Whether that is enough depends on how long the global tech rout lasts and whether the selling was a temporary scare or something more serious. For your portfolio, the lesson is simple. State intervention can create short-term stability, but it does not erase the risk that comes with any single country's market.
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