China is scrambling to contain a stock-market rout only two years after the previous rescue.
Beijing is dusting off the market-support playbook it deployed in 2024. The People’s Bank of China is providing low-cost funding for corporate share buybacks and liquidity for institutional investors. The shadowy “national team” appears to have stepped up its operations, while regulators are again resorting to window guidance — informally instructing institutional investors and brokerages not to sell.
In October, China’s stock market suffered its worst monthly decline in more than a decade. The blue-chip CSI 300 Index has fallen into a bear market from its late-June peak, while Shanghai’s semiconductor-heavy SSE Science and Technology Innovation Board 50 Index, or Star 50, has plunged as much as 48%.
So who’s been selling? The blame game has already begun. Shiva Capital Group, one of China’s biggest hedge funds, has pointed the finger at insurers. In a recent letter to clients, founder Hong Liang accused the insurance firms of piling into technology stocks near their July peak, only to slash positions in late September. The behavior was “truly baffling,” lamented the prominent investor, who has a large following on the mainland.
Liang certainly has reason to deflect blame. China has a long history of faulting private-sector investors, from quant funds to foreign asset managers, for igniting selloffs. But he might just have a point this time.