Can Beijing’s stock support deliver a long bull run and fuel its high-stakes tech drive?
The country’s push to stabilise markets reflects urgency to sustain capital access for tech firms and protect small investors
Beijing’s intervention signals a regulatory intention to engineer a more durable and sustainable bull run on the nation’s US$15 trillion stock market, which is now counted on to support strategic tech self-sufficiency through equity financing while preserving household wealth.
“Beijing may tolerate lower prices, stretched valuations being compressed and some of the speculative foam being skimmed from the market,” said Stephen Innes, managing partner at SPI Asset Management. “What it will not tolerate is an uncontrolled liquidation that threatens confidence, financing conditions or the credibility of China’s strategic technology push.”
The effort initially paid off on Tuesday, when the tech-heavy Star Market 50 Index jumped 11 per cent, rebounding from a more than 20 per cent decline that had technically plunged the gauge into bear-market territory last week.
[T]he release of market-stabilising signals alongside fresh capital inflows would repair the risk appetite in the near term and give support to Chinese assets to some extent
Policy support gained traction as five state-backed insurers, including Ping An Insurance Group and China Life Insurance, pledged to boost equity investments. That followed China Securities Regulatory Commission chairman Wu Qing vowing to revive confidence by introducing more market-stabilising measures and two state buyers pouring about 60 billion yuan (US$8.9 billion) into stocks.