China’s state-backed funds appear to be re-entering the stock market, signaling Beijing’s effort to stabilize falling shares. One of the national team’s preferred blue-chip ETFs saw record inflows on Thursday amid a global tech selloff that spread to China’s domestic market. Though no official confirmation exists, the scale and timing strongly suggest state funds were behind the buying.
Bloomberg Intelligence analyst Rebecca Sin said it is "almost certain" the national team was responsible, acting as a market stabilizer and putting a floor under A-shares. The inflows mark one of the clearest signs since a three-month selloff that state funds are ready to intervene under pressure, potentially reassuring investors and easing strain on battered tech stocks. The E Fund CSI 300 Index ETF drew a record 18.8 billion yuan ($2.8 billion) on Thursday, driven by a late-session surge that coincided with the CSI 300 reducing its losses.
The benchmark rose Friday for the first time that week. Other funds used to support equities, like the China AMC STAR 50 ETF, also saw heavier inflows. The last major intervention occurred in July, when regulators, state-backed investors, insurers, and asset managers acted to shore up confidence after a tech-led selloff.
Beyond market stabilization, supporting AI stocks could help Chinese firms raise capital to compete with U.S. rivals. After Thursday’s close, several companies announced share buybacks, with Eoptolink Technology Inc. proposing to repurchase up to 1 billion yuan of its shares. Suzhou TFC Optical Communication Co. and Avary Holding proposed smaller buybacks, while Zhongji Innolight Co. said September buybacks would be canceled.
Fund manager Li Xuetong noted it’s worth watching whether the buying will persist and if the 3,700 level for the Shanghai Composite will hold, given the index is currently around 3,739.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing