The Chinese national team finally came to the rescue of the Chinese stock market, entering the market for the second time in two weeks to stop the decline

The decline in Chinese stocks has worsened as concerns about consumer spending and defaults on real estate debt have worsened, with news that the Chinese national team has stepped in to bail out the market twice in the past few weeks.

Bloomberg reported that the Shanghai and Shenzhen 300 Index edged down only 0.6% at the end of February 8, which was greatly restrained from the 2.4% intraday decline (the largest intraday decline since August 2021). According to sources, several funds with official colors entered the market to buy stocks on the afternoon of the 8th, in order to slow down the decline, and the buying mainly concentrated on financial stocks (including securities companies). Energy, utilities and financial stocks bucked the trend and closed higher on the 8th. The national team entered the market when the Chinese stock market was about to give up all the gains made in the red market on the 7th.

The CSI 300 Index fell into a bear market on the 8th. Zero Hedge reported on the 8th that the national team started on January 27. At that time, seven of the top ten fund management companies in China (including E Fund Asset Management and GF Asset Management) bought Chinese stocks. Not only that, the official media “Securities Times” also called on securities companies, fund managers, insurance companies and other investment institutions to “stand up” and enter the market to support the market when market volatility increases.

Beijing’s government often speaks out through state media, calling on big investors to buy on dips. This verbal intervention suggested that officials were increasingly worried about capital markets and determined to increase support after the PBOC eased monetary policy.

According to reports, the Chinese national team has been very active in recent weeks, very similar to the actions of the Chinese stock market in late July 2021 when Beijing regulation led to a sharp fall in the Chinese stock market and the implosion of Hong Kong technology stocks, which also prompted the Chinese stock market to launch a multi-week rally.

ADR, a Chinese concept stock listed in the United States, jumped on the 8th. Alibaba (Alibaba), Pinduoduo (Pinduoduo), Bilibili (Bilibili), JD.com (JD.com) ADR rose 6.17%, 12.81%, 7.03%, 3.02% respectively. The KraneShares CSI China Internet ETF jumped 4.08% to end at $37.03.

It is worth noting that a large number of investors rushed into Hong Kong stocks at bargain prices last year. The Financial Times reported on the 7th that 143 ETFs listed in Hong Kong had a net inflow of HK$80 billion (equivalent to US$10.3 billion) last year, more than double the net inflow of HK$40 billion in 2020.

Brian Roberts, head of ETFs at the Hong Kong Stock Exchange, pointed out that thematic ETFs, Hong Kong stock ETFs and China fixed income ETFs were the three categories that attracted the highest amount of money last year.

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