China considers stock market rescue package worth $278 billion: Report
Chinese authorities are considering measures to stabilize the slumping stock market, including mobilizing 2 trillion yuan ($278 billion) from offshore accounts of state-owned enterprises and investing in onshore shares through the Hong Kong exchange link.
Chinese authorities are considering a package of measures to stabilise a slumping stock market, Bloomberg News reported on Tuesday, citing people familiar with the matter. After earlier attempts to restore investor confidence fell short and prompted Premier Li Qiang to call for “forceful” steps, the report said.
Policymakers are seeking to mobilise about 2 trillion yuan ($278 billion), mainly from the offshore accounts of Chinese state-owned enterprises, as part of a stabilisation fund to buy shares onshore through the Hong Kong exchange link, the report said, citing people familiar with the matter. They have also earmarked at least 300 billion yuan of local funds to invest in onshore shares through China Securities Finance Corp. or Central Huijin Investment Ltd.
Officials are also weighing other options and may announce some of them as soon as this week if approved by the top leadership. The plans are still subject to change. The China Securities Regulatory Commission didn’t respond to a request for comment, the people told Bloomberg.
The deliberations underscore the elevated level of sense of urgency among Chinese authorities to stem a selloff that sent the benchmark CSI 300 Index to a five-year low this week. Calming the nation’s retail investors, many of whom have been bruised by the protracted property downturn, is also seen as key to maintaining social stability.
Whether such measures will be enough to end the rout is far from certain. The property crisis, depressed consumer sentiment, tumbling foreign investment, and diminished confidence among local businesses after years of volatile policymaking are exerting strong downward pressure on both the economy and financial markets, according to the report.
Past efforts to shore up the stock market, most notably in 2015, proved insufficient at best and at times counterproductive. Authorities have also been reluctant to roll out major economic stimulus of the sort that many equity investors have called for, as reported by Bloomberg.
The report pointed out that more than $6 trillion has been wiped out from the market value of Chinese and Hong Kong stocks since a peak reached in 2021, underscoring the challenge that Beijing faces as it seeks to arrest a decline in investor confidence.
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