Chinese stocks slid deeper into a bear market as rescue efforts by state-backed funds failed to rebuild investor confidence. The onshore benchmark CSI 300 Index dropped as much as 1.9% on Friday, taking the week's losses to nearly 5%, the most in three months. The gauge had fallen 20% from its June high on Thursday, entering a bear market, and has moved through the closely watched 4,000 level.
The selloff is testing Beijing's ability to revive confidence. State buying has offered limited support as deteriorating momentum keeps investors reluctant to take on risk on valuations alone. Inflows into nine exchange-traded funds favored by China's so-called national team hit 35 billion yuan ($5.24 billion) early Friday, according to Bloomberg-compiled data, yet the CSI 300 only managed to pare some losses. Purchases had reached 46 billion yuan on Thursday, the most since the Liberation Day-spurred rout in April 2025.
Jade Fu, head of global multi-asset portfolio management for APAC at UBS Asset Management, said on Bloomberg TV that "cheapness alone is not the catalyst," adding that growth, investor behavior and momentum remain challenging. Persistently sluggish consumption and waning policy support continue to cloud China's growth outlook. Third-quarter GDP beat expectations, but expansion for the first nine months stayed near the lower end of Beijing's 4.5%-5% annual target. Earnings concerns are also weighing on major companies, with Contemporary Amperex Technology Co. Ltd. reporting slower-than-expected quarterly profit growth this week.
Li Ying, a fund manager at Shanghai Zhenying Investment Management Co., warned that rising margin calls could create a negative feedback loop, while funds targeting absolute returns could add forced selling. Xin-Yao Ng, a fund manager at Aberdeen, said state buying may provide a floor but is only a temporary solution. "At its core, China needs domestic consumption and investments to improve," he said. The outstanding amount of margin trades fell 1% on Thursday to the lowest in one year.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing