China: National team support shapes flows – BNY

BNY’s Geoff Yu highlights how China’s regulators and state-backed funds have stepped in to stabilize A-shares after global tech deleveraging hit domestic markets. Official buybacks and insurer commitments are framed as market protection rather than macro repair, with institutional flows into Chinese equities recovering and seen as an upside risk to APAC (Asia-Pacific) sentiment heading into month-end.

State-backed buying underpins Chinese markets

"China’s “national team” of regulators and state backed funds moved to calm A-share volatility on Monday after global tech deleveraging and profit-taking spilled into domestic markets. The China Securities Regulatory Commission held an investor symposium, signaling stronger supervision, investor protection and a commitment to stable market operations. At the same time, the so-called national team injected about ¥60bn through stock buyback re-lending facilities, with centrally administered state firms buying shares in SOEs, technology companies and ETFs."

"Our data indicate that this had been expected, as institutional flows last week jumped materially after material sales throughout much of June. As key levels approached, the signaling was clear, and we expect both domestic and cross-border participation to push higher. Whether retail participates is a different question: this group moved from clear selling interest in early April to strong purchases in mid-June – even absorbing some institutional sales – but the recent momentum turn is clear."

"Institutional pickup in Chinese equities, with official backing, is a clear upside risk to APAC sentiment heading into month end, especially with the customary end-July politburo meeting due to set the growth agenda for the rest of the year."

"China’s national team is offering market protection, not macro repair. State-backed equity purchases can stabilize benchmarks and reduce downside pressure, but they don’t solve weak domestic demand or the property drag. Beijing can protect prices, but confidence still requires a stronger growth impulse."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)