China's State Funds Said to Intervene in Stock Market
China’s stock rout turned so extreme that state-backed funds intervened to calm the market on Tuesday, but authorities appeared to make it somewhat difficult to find out what happened on the mainland.
On Weibo, the Twitter-like platform with about half a billion active users, a search for Chinese equivalent of “stock market” generated no posts on its web version on Wednesday, suggesting the phrase had been censored. Users could still post using the term, and the mobile version showed some results if hashtags weren’t included. Searches for words that mean “plunge,” “A-shares” and “stocks” were successful in the morning.
The Chinese government’s limits on search results came during the annual session of the National People’s Congress, the biggest political event of the year. An article in the Shanghai Securities News, one of China’s most widely circulated financial dailies, said large insurers bought stocks on Tuesday. The report also denied recent “rumors” that insurers had made large-scale redemptions of stock funds, citing investment managers at companies in the sector.
Still, mentions of the stock plunge were notably absent from the front pages of China’s major financial newspapers on Wednesday, which instead focused on President Xi Jinping’s comments about national defense during the legislative session.
The bearish mood in China’s stock market has been a challenge even for state-backed funds, casting a cloud over the Communist Party’s biggest political event of the year. In just 14 trading days the benchmark CSI 300 Index plummeted 14 per cent from a 13-year high, wiping out more than US$1.3 trillion of value and hammering the holdings of retail investors who piled in at the peak.
Chinese media outlets often influence the market by downplaying recent turbulence or discouraging excess. In 2019, when stocks sank following threats from Donald Trump to impose more tariffs on Chinese exports, one article argued the bull market would resume. Posts about Trump’s comments were removed from social media.