China has deployed its state-backed "national team" of banks to stabilize the equity market, with net inflows into exchange-traded funds hitting $11.5 billion on Tuesday, the second highest daily amount on record. A significant portion of these funds targeted technology indices, with China AMC's Star 50 ETF receiving $1.7 billion and EFund's Chi Next ETF attracting $1.4 billion. This intervention propelled the Star 50 and Chi Next indices up 9.9% and 6.4% respectively, while the broader CSI 300 rose 2.3%.
The move comes as Beijing attempts to revive investor sentiment in the tech sector, which has faced heavy selling pressure year-to-date. The CSI 300 is down over 11% while the Star 50, once up more than 60% year-to-date, is now in negative territory. Wall Street benchmarks like the S&P 500 and Nasdaq 100 have seen double-digit gains, highlighting the relative underperformance of Chinese markets.
The price action extended to Hong Kong-listed AI labs, with Z. AI and Mini Max jumping 9.6% and 7.5% respectively. Despite the government's efforts, including cutting relending facility rates and boosting swap operations, some investors remain skeptical, arguing the market remains too reliant on state support.
China's retail investors have largely stayed on the sidelines.
Source: Financial Times Markets · Summarized by HeadlinesBriefing