A basket of eight exchange-traded funds favoured by the so-called national team saw record net inflow of 42 billion yuan Monday, amid Beijing’s coordinated efforts to stem an equities rout. An index of Chinese stocks listed in Hong Kong sank more than 13% on Monday, putting it into a bear market.
“Directly buying the market is one of the ways China can immediately tackle the impact from US tariffs and stabilise sentiment a bit,” said Steven Leung, an executive director at UOB Kay Hian in Hong Kong. “But, they will have to do more stimulus as well,” including rate cuts and fiscal spending.
US-listed Chinese stocks slid further Monday after US President Donald Trump threatened to slap additional 50% import taxes on China. That followed Beijing’s move to retaliate with tariffs on US goods.
See also: Xi signals China may finally move to end deflationary price wars
Chinese officials have been discussing front-loading potential stimulus to offset the impact of tariffs. The market may need to see consistent interventions as the week unfolds if the authorities are determined to stabilise Chinese stocks.
The People’s Bank of China said Tuesday that it will provide sufficient re-lending support to Central Huijin Investment to maintain smooth operations of capital markets when necessary.
Chart: Bloomberg
