China’s stock market rebounded on Monday after a historic selloff, with state-linked funds known as the national team buying assets and the central bank promising loans to help stabilize the market. The Hang Seng China Enterprises Index closed up 2.3%, while the CSI 300 Index ended 1.7% higher.
To calm investors’ nerves, officials and executives unveiled a series of measures, including state-backed investors buying stocks and exchange-traded funds, companies promising buybacks, and regulators loosening rules on insurers’ investments. The central bank also eased its grip on the currency and pledged more lending to help a sovereign fund load up on shares.
However, tensions between China and the US remain high, with President Donald Trump threatening to impose another 50% tariff on China if it doesn’t back down. Beijing has responded by saying it will “fight until the end.”
Analysts warn that this is just the beginning of a prolonged period of tension, with investors bracing themselves for further volatility. As one strategist noted, “We are well and truly into the game of chicken,” where both countries must blink first to avoid economic consequences.
The national team’s support has helped alleviate market concerns, with a record inflow of 105 billion yuan ($14.3 billion) into exchange-traded funds favored by China’s sovereign wealth fund on Monday. Companies have also announced share buybacks totaling at least 30 billion yuan ($4.1 billion), and regulators plan to lift the limit for insurance companies’ equity investments.
Despite these efforts, investors remain cautious, with some warning that more stimulus may be needed to offset the damage of tariffs. The central bank’s support for a sovereign fund could help boost the economy if it becomes a long-term policy.
Source: https://finance.yahoo.com/news/chinese-stocks-bounce-back-state-083537813.html