Inflows surge at biggest China ETF as state said to intervene

Hong Kong

MORE money is flowing into the world's largest exchange-traded fund tracking Chinese stocks than at any time since the boom-and-bust in 2015, as state investors were said to have been stepping in to stem a market rout.

The Shanghai-traded China 50 ETF has received about US$1.19 billion this October, as the Shanghai Composite Index heads for one of its worst months since January 2016. Other mainland large-cap funds including China CSI 500 ETF and the Hong Kong-traded CSOP FTSE China A50 ETF have also seen a surge in inflows.

China's so-called national team of state funds has been buying stocks in a targeted fashion over the past week, including purchasing large-cap stocks on Friday and Monday, according to people familiar with the matter.

China has announced a series of measures this month to shore up confidence in the market and arrest declines.

The government has a long history of stepping in to support equities via the national team during periods of extreme volatility or around significant political events. Inflows into the large-cap ETFs come after two funds linked to the Chinese government sold all their holdings of stocks and bonds in the third quarter. BLOOMBERG