China's top economic officials are promoting market openness in Hong Kong while actively steering financial markets on the mainland. Vice Premier He Lifeng pledged support for a free economic environment in Hong Kong as the central bank moved to cool the yuan's longest winning streak in three decades. The People's Bank of China raised foreign currency reserve requirements to 6% from 4%, helping snap a 13-day yuan winning streak, its longest since 1996.
On the stock front, regulators revived rescue tools from 2024, conducting operations under a swap facility to exchange assets for liquidity to buy shares. The PBOC also cut the relending rate for corporate share buybacks to 1% from 1.25%, making the facility permanent. More than 100 billion yuan ($15 billion) of swap quotas have been sought by securities and fund firms.
Despite these interventions, investor enthusiasm remains mixed. The CSI 300 was little changed, while the tech-heavy Star 50 fell up to 3.2%. Analysts note the measures target liquidity and sentiment but cannot alter fundamental growth weaknesses. "The weakness in growth momentum, credit impulse and leverage is the key reason why the market in China is not performing well," said Nick Ferres of Vantage Point Asset Management.
The flurry of action highlights Beijing's balancing act of attracting global capital while retaining firm control over domestic markets.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing