China Stocks Rebound in Afternoon Amid Spike in ETF Turnover


(Bloomberg) — Chinese equity benchmarks rebounded in afternoon trading, with a jump in turnover in some major exchange-traded funds raising speculation that buying by state funds maybe behind the reversal.

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Traded value of the Huatai-Pinebridge CSI 300 ETF surged to 15.3 billion yuan ($2.1 billion) on Thursday, the highest since 2015, while those for Harvest CSI 300 Index ETF and E Fund CSI 300 ETF also jumped. That coincided with gains in the CSI 300 benchmark of mainland shares, which closed 1.4% higher after declining as much as 1.8%.

“The national team is likely stepping to stabilize the market as they have done in previous market crashes,” said Marvin Chen, a strategist at Bloomberg Intelligence. “More recently bounces in the A-share market have also been accompanied by northbound stock connect inflows, which may be driven by bargain hunting activity.”

The Hang Seng China Enterprises Index rose as much as 1.3%, reversing an earlier decline.

READ: China’s Stock Slump Shows No Signs of Let-Up as Risks Abound

The rare advance in Chinese gauges come after selloff extended into the new year as skepticism over the market’s outlook lingered. The latest economic data showed property crisis deepening in the world’s second-largest economy, while geopolitical tensions with the US continue to put investors on edge.

Down 10% this year, the HSCEI gauge is the world’s worst-performing major index.

During previous market slumps, state funds were suspected to be behind increases in the turnover of such ETFs as they stepped in to rescue the market. For instance, Central Huijin Investment Ltd., a sovereign wealth fund, bought an undisclosed amount of ETFs in October and vowed to keep increasing its holdings.

READ: Record Turnover in China ETFs Fuels State Buying Speculation

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