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China stock market: state buying of shares has become more frequent and will support rebound towards year-end, Goldman Sachs report says
- ‘The ‘National Team’ buying helps reinforce our view that Chinese equities could stage a recovery rally towards the year-end,’ Goldman said in a report
- The top five exchange-traded funds favoured by the National Team surged by US$12.3 billion in net subscriptions in August, it said
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Zhang Shidongin Shanghai
The government has become more active in buying Chinese stocks since August as it attempts to breathe life back into the flagging market, according to Goldman Sachs.
The US investment bank predicts this will help engineer a rebound in equities for the rest of the year.
“The ‘National Team’ buying helps reinforce our view that Chinese equities could stage a recovery rally towards the year-end as growth stabilises and policy easing momentum improves,” Goldman said in a report, using a term used by local investors to refer to state buyers.
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It reached its conclusion based on indicators such as the trading patterns of key holdings by state-linked entities, inflows into selected index-based exchange-traded funds (ETFs) and insider buying of shares in state-owned enterprises (SOEs), analysts including Si Fu and Kinger Lau explained in the report.
The top five ETFs favoured by the National Team surged by 90 billion yuan (US$12.3 billion) in net subscriptions in August, it said.
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The possibility of more direct state interventions in China’s US$9.5 trillion stock market has grown after Central Huijin Investment, a unit of the nation’s sovereign wealth fund, increased its stake in the “big four” state-owned banks for the first time in eight years last week. The move sparked speculation that similar direct efforts to prop up the market might follow.
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