The scale and speed of the intervention, nearly $9 billion deployed in a single weekend, signals policymakers are treating the AI driven tech selloff as a stability risk worth countering directly rather than waiting it out. Monday’s rebound in the Shanghai Composite and a partial recovery in the ChiNext suggest the move is having some immediate effect, though the ChiNext’s 21% monthly decline shows how much ground state buying still has to make up. Investors will be watching whether the so called national team continues topping up its positions in the coming days, and whether that support proves durable once the underlying AI spending concerns that triggered the selloff are addressed, or merely papers over them in the near term.
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Beijing’s state investors moved to put a floor under a deepening AI driven tech selloff, deploying nearly $9 billion in a single weekend and helping stocks stage a partial rebound on Monday:
Summary:
- China Reform Holdings tapped more than 50 billion yuan, or $7.38 billion, from the special relending facility and matching funds for share buybacks and stake increases
- China Chengtong Holdings said its subsidiaries purchased nearly 10 billion yuan, or $1.48 billion, of Chinese equity assets
- Both firms described themselves as firmly optimistic about China’s capital market and said they would keep increasing stakes in state owned enterprises and tech names
- The Shanghai Composite Index has fallen 7.3% this month, while the ChiNext Price Index has slumped 21%
- Analysts said the intervention signals a strong intent by the so called national team to establish a market floor and reflects policymakers’ determination to maintain stability
- The Shanghai Composite ended 0.85% higher on Monday, rebounding from a 5.8% drop the previous week
- The ChiNext Price Index rose 0.4% on Monday after slumping 11% the previous week
Two Chinese state investment firms deployed nearly $9 billion over the weekend to support the country’s stock market, according to the Wall Street Journal (gated), after artificial intelligence spending fears triggered a deepening selloff in chip and tech shares in recent weeks.
China Reform Holdings said Sunday that its unit tapped more than 50 billion yuan, equivalent to $7.38 billion, from the special relending facility and matching funds for share buybacks and stake increases aimed at helping stabilise the market. In a separate disclosure the same day, China Chengtong Holdings said its subsidiaries had purchased nearly 10 billion yuan, or $1.48 billion, of Chinese equity assets. Both firms described themselves as firmly optimistic about the prospects for China’s capital market and said they would continue increasing their stakes in state owned enterprises and technology names to maintain stability.
The intervention comes amid a broader global selloff in chip and tech stocks, as investors grow increasingly unsettled about the scale of spending on AI infrastructure. The benchmark Shanghai Composite Index has shed 7.3% so far this month, while the tech heavy ChiNext Price Index has slumped 21% over the same period, underscoring how sharply sentiment has turned against the sector that had driven much of the market’s earlier gains.
Analysts said China Reform and China Chengtong, part of a group of state linked entities commonly referred to as the national team, have signalled a strong intent to establish a floor under the market and have conveyed policymakers’ determination to maintain stability in China’s capital markets. The move follows a familiar playbook Beijing has used during previous periods of market stress, deploying state capital directly into equities to counter selling pressure and steady investor sentiment.
There were early signs the strategy was working. The Shanghai Composite ended Monday 0.85% higher, rebounding from a 5.8% drop the previous week, while the ChiNext Price Index rose 0.4% after slumping 11% over the same period. Whether that stabilisation holds is likely to depend on how the broader AI spending concerns driving the global tech selloff evolve in the days ahead, and on whether state investors continue adding to their positions if selling pressure resumes.
This article was written by Eamonn Sheridan at investinglive.com.