Short Notes

by Michel Schiffelholz, CIO

Chinese Stability: ETFs to the Rescue

Wednesday, 21 February 2024 10:21

Chinese state-owned funds have been actively increasing their holdings in local equities even before the Lunar New Year holiday, in a bid to restore investor confidence.

Central Huijin Investment Ltd., a sovereign wealth fund that owns Chinese government stakes in major financial institutions, has publicly expressed its intention to continue increasing its holdings in ETFs. Inflows into several ETFs tracking key market indicators reached a record high last month, surpassing the overall amount seen during the market turmoil in July 2015, when the so-called "national" intervention team reacted to stabilise the market.

This recent interest in CSI 500 and CSI 1000 ETFs suggests that government funds are broadening their scope and emphasising their commitment to market stability. The message is clear: they are keen to maintain a stable and confident investment environment.

(source: Bloomberg: China’s National Team Is Back at Work as Stock Trading Resumes)

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