Regulators plan to brief Xi
Regulators plan to brief President Xi Jinping on the market as soon as Tuesday (Feb 13), Bloomberg News reported. While it is unclear whether any new support measures will come out of the Xi meeting, traders are hoping this time will be different.
Sovereign wealth fund pledges support
Central Huijin Investment, the unit that holds Chinese government stakes in big financial institutions, said it will buy more exchange-traded funds. The securities regulator vowed in a follow-up comment to maintain stable market operations, adding that authorities will continue to guide various institutional investors and funds to enter the market with greater efforts.
M&A and restructuring support
China will strongly support listed companies to enhance their investment value through mergers, acquisitions and restructuring, the China Securities Regulatory Commission said.
‘National team’ buying shares
The so-called national team has bought roughly 70 billion yuan (S$13.2 billion) of onshore Chinese shares in the past month, according to estimates by Goldman Sachs, adding that 200 billion yuan or ~0.8 per cent of free float market capitalisation is needed to stabilise the market.
The national team refers to a group of Chinese state funds tasked to support markets. Meantime, overseas investors, which may include offshore proxies for such state funds, bought another 1.7 billion yuan of mainland stocks via trading links with Hong Kong on Wednesday, marking the seventh consecutive session of inflows.
Restricting sales
China is tightening trading restrictions on domestic institutional investors as well as some offshore units as authorities fight to stem a deepening stock rout, according to sources familiar with the matter.
Officials this week imposed caps on some brokerages’ cross-border total return swaps with clients, limiting a channel that can be used by China-based investors to short Hong Kong stocks, said the people, asking not to be identified discussing a private matter. At the same time, some Chinese brokers that use the channel to buy mainland shares for their offshore units were told not to reduce their positions, the people said.
