China rushes to shore up struggling markets

{"text":[[{"start":8.88,"text":"Beijing is rushing to shore up its struggling stock markets as China’s AI trade goes into reverse amid slowing economic momentum and a lack of large-scale fiscal stimulus."}],[{"start":20.36,"text":"The CSI 300 index of Shanghai- and Shenzhen-listed stocks has entered a technical bear market, down 10 per cent year to date and more than 20 per cent from a June peak."}],[{"start":31.3,"text":"The contagion has spread to Hong Kong, where mainland Chinese investors — a crucial source of demand for the city’s equities — have sold HK$20bn ($2.5bn) of stocks so far this month, putting October on track for the largest month of mainland outflows since July 2021, according to FT calculations."}],[{"start":51.08,"text":"Hong Kong’s Hang Seng index has fallen more than 12 per cent this year, while the tech sub-index is down more than 30 per cent."}],[{"start":null,"text":"

"}],[{"start":58.68,"text":"There are signs that Beijing has deployed its so-called national team of state-aligned funds and brokers to buy Chinese stocks and dissuade domestic investors, who make up the majority of trading activity in mainland China, from fleeing the market."}],[{"start":72.76,"text":"National team purchases of domestic exchange traded funds last week were probably the most aggressive since Donald Trump’s “liberation day” tariff announcement in April 2025, according to analysts at Macquarie who used net inflows into ETFs held by state-owned investor Central Huijin as a proxy."}],[{"start":90.92,"text":"“National team buying aims to put a floor under the market,” they wrote in a note on Tuesday. “A sustained market rally still depends on a recovery in domestic demand, which may come once Beijing can no longer rely on exports to drive growth.”"}],[{"start":null,"text":""}],[{"start":103.96,"text":"AI hardware stocks have been some of the hardest hit. The CSI 300’s industrials sub-index is down 23 per cent since the start of the year."}],[{"start":112.8,"text":"Its largest constituent, the world’s biggest battery maker CATL, has seen its share price in Shenzhen fall 37 per cent since the start of the year. Meanwhile, CXMT, China’s largest producer of DRam chips, is down 20 per cent in the past month after a roaring IPO in July."}],[{"start":130.16,"text":"The tech rout comes despite China’s efforts to compete with the US in AI through open-source models from labs such as DeepSeek and Moonshot."}],[{"start":139.44,"text":"Policymakers in Beijing provided a major shot in the arm to domestic stock markets in September 2024 when they unveiled a package of policies that included financing for share buybacks."}],[{"start":150.96,"text":"But hopes of major stimulus have faded over the course of this year, with recent data showing a decline in government spending in the first nine months."}],[{"start":159.68,"text":"“Fiscal policy has turned contractionary as opposed to expansionary,” said Kinger Lau, chief China equity strategist at Goldman Sachs, describing it as one of the “major surprises” compared with expectations at the beginning of the year."}],[{"start":172.84,"text":"Analysts also pointed to greater government scrutiny of offshore wealth and trusts as a trigger for stock sales, particularly in Hong Kong. Some equity analysts speculated that wealthy investors were looking to raise cash to pay tax bills that could date back decades."}],[{"start":188.72,"text":"“Fundamentals-wise we can’t see any big changes apart from the tax on offshore trusts,” said Kieron Poon, investment director of Asian equities at Aberdeen Investments."}],[{"start":198.12,"text":"Lau added: “At a very high level, I think the tax development is just a manifestation of the tightening fiscal policy.”"}],[{"start":206.24,"text":"China’s economic data has indicated worsening momentum this year, especially in terms of consumer demand. Retail sales declined in May for the first time since late 2022 and have remained persistently low since then."}],[{"start":220.04,"text":"Fixed-asset investment is down 7.2 per cent year on year in the nine months to the end of September, though exports have soared."}],[{"start":228.32,"text":"Last month, Beijing unveiled new mortgage subsidies that were widely perceived as small-scale compared with the country’s vast and struggling property sector, which has been mired in a slowdown for half a decade."}],[{"start":239.88,"text":"China’s top Communist Party leadership is meeting for a discipline-focused fifth plenum this week. Some analysts are holding out hope of a policy shift after the meeting."}],[{"start":240.38,"text":"Data visualisation by Haohsiang Ko in Hong Kong"}],[{"start":252.84,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1793163417_8167.mp3"}