China’s wealth fund vows to play role in stabilising markets

CHINA’S US$1.24 trillion sovereign wealth fund vowed to help with risk mitigation and market stabilisation in 2024, the latest sign of state companies playing a bigger role in bolstering the nation’s ailing stock market.

Central Huijin Investment, the unit that holds government stakes in big financial institutions, will coordinate such tasks as it seeks to strengthen state financial capital, parent firm China Investment Corporation (CIC) said in a Monday (Jan 15) readout of its annual work meeting. Huijin will also “enrich, improve and upgrade” its equity management tools, it said without providing details.

Overseas investors have resumed selling onshore stocks in the new year as pessimism over the nation’s sluggish economic recovery deepens. Chinese equities saw their worst start to a year since 2019, after the CSI 300 Index slumped 11 per cent last year despite support measures including Huijin’s purchases of exchange-traded funds (ETFs) and bank shares.

CIC “achieved value preservation and growth of state-owned financial capital” last year, and the performance of companies it managed improved, the firm said, without elaborating.

Huijin’s previous moves to purchase ETFs – occurring in June 2013 and July 2015 – were both followed by gains of more than 20 per cent in Shanghai stock indexes within three months. That said, Huijin’s latest announcement to buy such funds on Oct 23 did little to revive sentiment, with the Shanghai Composite Index losing about 2 per cent.

Chinese authorities have in recent days told some institutional investors not to sell stocks, reimposing net-selling restrictions after market declines in the new year increased pressure to stabilise share prices, the Financial Times reported on Tuesday, citing unidentified traders and investment managers.

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Huijin holds major stakes in state-owned banks including the Industrial & Commercial Bank of China, insurers such as New China Life Insurance and securities brokerages such as China International Capital. BLOOMBERG