Tuesday, March 9th, 2021
To slow down falls
China lets "national team" buy stocks
At the People's Congress, China's leadership wants to demonstrate stability and unity. Falling stock markets disrupt the staging – especially with a view to Hong Kong. That is why Beijing intervenes.
China's stock markets have been experiencing a sharp setback for around three weeks. For the state and party leadership this is a very unpleasant timing. After all, the People's Congress is currently underway, at which President Xi Jinping has his plans approved. Today a particularly sensitive topic was on the program: The draft law on electoral reform in Hong Kong was discussed so that Beijing loyalty will definitely have the say there in the future.
Falling stock exchanges do not fit into the staging of the CP, which is primarily intended to demonstrate unity and stability. According to the financial services provider Bloomberg, state-backed funds have therefore intervened massively today and bought shares.
This made it possible to almost push the indices on the mainland back into positive territory. In the closing deal, the prices then almost fell back to the daily low. The stock exchange in Shanghai was 1.8 percent weaker from trading, the index of the most important companies in Shanghai and Shenzhen, the CSI 300, lost 2.2 percent. To put it into perspective: the index has lost almost 15 percent since mid-February. In Hong Kong, however, the maneuver worked better. The Hang Seng Index gained 0.8 percent to 28,773 points.
It's going down
China's leadership has repeatedly intervened in the markets during important events. This time funds were used, which according to Bloomberg are also referred to as the "national team".
However, the correction on China's stock exchanges had previously been intensified by the leadership in Beijing. After the markets reached record highs in February, the brakes were applied. Financial market regulators warned of the formation of bubbles and promised countermeasures.
The CSI 300 then fell back almost 15 percent. High-flyers like Moutai were hit even harder. The paper had risen by 30 percent this year – the spirits manufacturer was worth around half a billion dollars on the stock exchange, making it one of the world's most valuable companies. The price has now collapsed by 25 percent.
.