(Reuters) – Chinese authorities are considering a series of measures to stabilize a struggling stock market, Bloomberg News reported on Tuesday, citing people familiar with the matter.
According to a report in Bloomberg News, Chinese policymakers have set aside around 2 trillion yuan (2,785 yuan) from offshore accounts, mainly those of Chinese state-owned enterprises, as part of a stabilization fund to buy domestic stocks through a Hong Kong exchange link. 300 million dollars).
Immediately after the Bloomberg report, Chinese stocks rose, but then reversed and fell on the day, with China’s blue-chip CSI300 index hovering near a five-year low. The index is down 6% this year after dropping 11% in 2023.
China’s stock market has had a dismal start to the year, with patchy economic growth and another slump in home sales last week, leaving foreign investors determined to avoid the country.
Global asset managers, who have been selling Chinese stocks as the post-pandemic economic recovery has stalled, are worried that it will take a long time to repair the real estate sector, which once accounted for a quarter of the economy. He says a large-scale economic stimulus package will be needed. their hearts.
Morgan Stanley said in a report last week that overseas funds have collectively sold about $1.6 billion in Chinese stocks so far this year, mainly from active funds in Europe and passive money in Hong Kong.
Chinese investors are also avoiding stocks.
According to a Bloomberg report, Chinese authorities have allocated at least 300 billion yuan of local funds to invest in domestic stocks through China Securities Finance Corporation or Central Huijin Investment Co., Ltd.
The government is considering other options and could announce some as early as this week if approved by the country’s top leadership, the report said.
There was no immediate comment from the China Securities Regulatory Commission.
(1 dollar = 7.1806 yuan)
(Reporting by Nilutpal Timsina in Bengaluru and Ankur Banerjee in Singapore; Editing by Christian Schmollinger and Muralikumar Anantharaman)