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Hong Kong
CNN
—
Chinese stocks rose by the most in years on Tuesday after the country’s sovereign wealth fund announced it would ramp up stock buying as authorities scramble to end a three-year market rout. showed.
The Shanghai Composite Index, a benchmark index of mainland China’s major state-owned enterprises and blue-chip stocks, ended 3.2% higher on Tuesday, ending a six-day losing streak. This was the largest daily increase since March 2022.
Small and medium-sized enterprises fared even better. Shenzhen component index rose 6.2%. This was the index’s highest single-day increase since September 2015, and the emerging companies index ChiNEXT surged 6.7%, its best performance in seven years.
In Hong Kong, the Hang Seng index rose 4%, its biggest rise in six months. Chinese tech stocks led the way. Alibaba Group (BABA), which is scheduled to report earnings on Wednesday, rose 7.6%.
The positive mood spread to Europe, where the region’s benchmark Stoxx 600 index opened about 0.5% higher before paring its early gains to 0.1 by 5:44 a.m. ET. % higher. US stock futures are mixed.
The rally in Chinese stocks came after the Chinese government stepped up efforts to support the economy. 2023 is set to be a disaster, with the struggling stock market the worst performer in the world so far this year.
By Monday, about $6.1 trillion in market capitalization had disappeared from Chinese and Hong Kong stock markets since their recent highs in February 2021.
Central Huijin Investment, the equity arm of state-run China Investment Corporation, said on Tuesday that it recently expanded its holdings in exchange-traded funds (ETFs) in the mainland stock market.
“We will continue to increase and expand our holdings in order to resolutely maintain the stable operation of the capital market,” the company said in a statement.
Shortly after the announcement, the China Securities Regulatory Commission issued a statement saying it “firmly supports” Central Huijin Investment’s plan to continue expanding its holdings.
The CSRC also added that the regulator said it would encourage more institutional investors such as mutual funds, national pension funds and insurance companies to enter the stock market.
The increased effort comes after Chinese markets resumed their decline on Monday, with more than 1,800 stocks in Shanghai and Shenzhen falling more than 10%.
Angry investors flooded the social media accounts of the US embassy in Beijing to vent their anger over the stock market crash as other protest sites were shut down.
The rise in Chinese markets on Tuesday was in contrast to other markets in the region. Japan’s Nikkei average and South Korea’s Kospi closed down 0.5% and 0.6%, respectively. Australia’s S&P/ASX 200 also fell 0.6%.
Redoubling its efforts to rescue Chinese stocks appears to have bought Beijing some more time, but the economy faces challenges including weak demand, deflationary pressures, a collapsing real estate sector and rising trade tensions with the United States. It does not address the fundamental issue of
A period of market lull following soothing words from the Chinese government came to an abrupt end late last month when a Hong Kong court ordered Evergrande, a symbol of China’s wealth crisis, into liquidation. This caused investors to retreat again.
Anna Cuban contributed to this article.