Huijin may have purchased 10 billion yuan in ETFs, the China Fund newspaper reported. — Bloomberg
SHANGHAI: China’s sovereign wealth fund bought exchange-traded funds (ETFs) on Monday, expanding its purchases beyond bank shares as authorities step up attempts to boost the country’s slumping stock market.
Central Huijin Investment Ltd, a unit of the US$1.4 trillion wealth fund China Investment Corp that’s long served as the main vehicle for China’s holdings in state-run banks, bought an undisclosed amount of ETFs and vowed to keep increasing its holdings, it said in a statement.
Huijin may have purchased 10 billion yuan in ETFs, the China Fund newspaper reported, citing brokerage estimates.
The purchases may be focused on ETFs tracking technology-stock indices, which come in line with regulators’ support of innovation, it said, citing Huachuang Securities Co analysis.
The move came shortly after the sovereign fund bought about US$65mil of shares in the nation’s biggest banks this month, a step that has so far failed to boost sentiment.
The benchmark CSI 300 Index has fallen 10% this year, closing at the lowest level since February 2019 on Monday, as investors remain worried about growth and the property market crisis even after the government’s rounds of support measures.
Central Huijin’s purchases of ETF tracking indices can have “more direct, more obvious” effects on the market than buying bank shares, especially as the economy is stabilising, Li Zhan, chief economist at China Merchants Fund Management Co’s research department, was cited by the official Shanghai Securities News as saying.
Turnover on the Huatai-Pinebridge CSI 300 ETF, one of the most-held ETF products by Huijin, jumped to the highest in two months on Monday, nearly three times its average over the past year.
The sovereign fund’s moves underscore concerns over the sinking market.
China is considering forming a state-backed stabilisation fund to shore up confidence in its US$9.5 trillion stock market, people familiar with the matter told Bloomberg earlier this month.
After at least two rounds of consultation with industry participants over a period of months, financial regulators, including the China Securities Regulatory Commission, recently submitted a preliminary plan to the nation’s top leadership, said the people. — Bloomberg
