China urged some of the country’s biggest investors to buy more stocks, stepping up efforts to stem the market’s slide toward a two-year low.
The China Securities Regulatory Commission issued the guidance on Thursday at a meeting with investors including the country’s giant social security fund, just as the benchmark CSI 300 Index was sliding toward its lowest level since June 2020.
The gauge did not change much yesterday after erasing a drop of as much as 1.1 percent.
Photo: Reuters
Chinese equities have lost about US$2.7 trillion of market value this year as the nation’s strict COVID-19 policies, corporate crackdowns and slowing economic growth spooked investors.
While a government committee led by Chinese Vice Premier Liu He (劉鶴) issued a sweeping set of policy promises to stabilize markets in mid-March, investors have so far been disappointed by a lack of follow-through.
“For a turnaround in sentiment, we need to see something sincere from policymakers, either a lot of extra liquidity, a major shift in the Shanghai situation, or a massive surprise that will breathe some new hope into the market,” Beijing Axe Asset Management Co fund manager Wang Yugang said.
“Even in a critical year like this, a robust stock market has quite a low priority because currently there’s no systemic risk,” he said.
The meeting was followed by a series of articles in state media projecting confidence in the economy and markets. The efforts underscore growing pressure on authorities to boost confidence before a closely watched leadership meeting that is expected to confirm a precedent-breaking third term for Chinese President Xi Jinping (習近平).
Other Chinese assets have also been under pressure. The onshore yuan is on track for its biggest weekly loss since August 2019, as concerns mount about slowing economic growth amid COVID-19 lockdowns.
The People’s Bank of China “is looking to provide further support for the economy, and seems intent on pulling as many levers as possible, perhaps with the exception of lowering interest rates for now,” said Khoon Goh (吳昆), head of Asia research at Australia & New Zealand Banking Group Ltd. “Allowing the yuan to weaken slightly this week seems to be part of the overall ‘support package.’”
The nation’s high-yield dollar bonds also declined for a second straight week in the worst such stretch since mid-March. That pares an initial bounce that securities received from Beijing’s promises, as investor patience for more details wears thin.
In a sign of broader concerns, higher-rated developers such as Country Garden Holdings Co (碧桂園) have posted some of this week’s largest declines. Any renewed rally ahead might only be sustained if concrete and significant policy steps are taken rapidly, said Jean-Louis Nakamura, chief investment officer for the Asia-Pacific region at Lombard Odier.
This is not the first time authorities have urged institutional investors to increase positions. A similar call was issued less than two weeks ago following a request made in October 2019.
With no end to tight COVID-19 restrictions in sight, overseas investors pulled a net 5.6 billion yuan (US$862.36 million) from Chinese shares this month after offloading 45 billion yuan last month, the largest outflow in nearly two years. Global funds slashed their holdings of Chinese bonds by the most on record in March.
Authorities have shown little alarm about the withdrawals.
“Obviously, Beijing wants to stem the bearish sentiment about both the economy and the stock market, but the economy is like a giant ship, and it takes time for it to turn around,” Core Pacific Yamaichi head of research Castor Pang (彭偉新) said. “Even if Beijing wants to talk up the market, it’s hard to change how investors are thinking.”
FALLING BEHIND: Samsung shares have declined more than 20 percent this year, as the world’s largest chipmaker struggles in key markets and plays catch-up to rival SK Hynix Samsung Electronics Co is laying off workers in Southeast Asia, Australia and New Zealand as part of a plan to reduce its global headcount by thousands of jobs, sources familiar with the situation said. The layoffs could affect about 10 percent of its workforces in those markets, although the numbers for each subsidiary might vary, said one of the sources, who asked not to be named because the matter is private. Job cuts are planned for other overseas subsidiaries and could reach 10 percent in certain markets, the source said. The South Korean company has about 147,000 in staff overseas, more than half
TECH PARTNERSHIP: The deal with Arizona-based Amkor would provide TSMC with advanced packing and test capacities, a requirement to serve US customers Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is collaborating with Amkor Technology Inc to provide local advanced packaging and test capacities in Arizona to address customer requirements for geographical flexibility in chip manufacturing. As part of the agreement, TSMC, the world’s biggest contract chipmaker, would contract turnkey advanced packaging and test services from Amkor at their planned facility in Peoria, Arizona, a joint statement released yesterday said. TSMC would leverage these services to support its customers, particularly those using TSMC’s advanced wafer fabrication facilities in Phoenix, Arizona, it said. The companies would jointly define the specific packaging technologies, such as TSMC’s Integrated
An Indian factory producing iPhone components resumed work yesterday after a fire that halted production — the third blaze to disrupt Apple Inc’s local supply chain since the start of last year. Local industrial behemoth Tata Group’s plant in Tamil Nadu, which was shut down by the unexplained fire on Saturday, is a key linchpin of Apple’s nascent supply chain in the country. A spokesperson for subsidiary Tata Electronics Pvt yesterday said that the company would restart work in “many areas of the facility today.” “We’ve been working diligently since Saturday to support our team and to identify the cause of the fire,”
China’s economic planning agency yesterday outlined details of measures aimed at boosting the economy, but refrained from major spending initiatives. The piecemeal nature of the plans announced yesterday appeared to disappoint investors who were hoping for bolder moves, and the Shanghai Composite Index gave up a 10 percent initial gain as markets reopened after a weeklong holiday to end 4.59 percent higher, while Hong Kong’s Hang Seng Index dived 9.41 percent. Chinese National Development and Reform Commission Chairman Zheng Shanjie (鄭珊潔) said the government would frontload 100 billion yuan (US$14.2 billion) in spending from the government’s budget for next year in addition
RSS