China mounts market intervention as Huijin leads stock purchases amid tariff war
China stepped up its intervention efforts to
stabilise its financial markets amid steep losses triggered by an all-out tariff war with the US, calling on at least US$1.3 trillion of funds at state-owned investment vehicles and insurance companies to help stem the worst rout in decades.
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The People's Bank of China (PBOC) on Tuesday said it would provide more liquidity to back purchases by sovereign wealth fund Central Huijin Investment to safeguard local market stability. The National Financial Regulatory Administration said it would allow insurers to use more funds to invest in the stock market, while an array of state-controlled firms stepped up buy-back plans in a move to shore up prices.
The CSI 300 Index, which tracks the biggest companies traded in Shanghai and Shenzhen, jumped 1.3 per cent at 2.42pm local time, clawing back some of the 7.1 per cent plunge on Monday. The Hang Seng China Enterprises Index, which crashed 13 per cent on Monday into bear-market territory, rebounded 0.8 per cent in Hong Kong.
'Beijing is sending a clear message [that] they're not going to let this market unravel without a fight,' said Stephen Innes, a managing partner at SPI Asset Management in Bangkok. 'This isn't moral support, it's a full-on monetary airlift.'
02:48
China vows to take 'countermeasures' after Trump's new 50% tariff threat
China vows to take 'countermeasures' after Trump's new 50% tariff threat
China met US President Donald Trump's 'Liberation Day' 34 per cent tariffs with a matching blow on US goods last week, sending global markets into a seizure on Monday and fanning demand for safe haven assets. The Hang Seng Index, dominated by China's biggest companies, suffered its worst one-day loss since the Asian financial crisis in 1997. Trump has threatened to impose
another 50 per cent levy on Chinese goods if Beijing does not remove its tariff, worsening the outlook.
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On Monday, Central Huijin said it bought exchange-traded funds (ETFs) to support the market and would boost its purchases in the future to restore confidence, without disclosing details. The firm, with 7.76 trillion yuan (US$1.1 trillion) of assets, is a unit of sovereign wealth fund China Investment Corp and owns strategic stakes in the nation's biggest lenders.
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