Radio Free Asia (RFA) recently reported that the Chinese stock market started the year quite poorly. People familiar with the matter said China’s major stock exchanges have currently restricted large funds from selling stocks, requiring daily transactions to “buy more than sell.”
While the funds can still sell shares if the total value of the sales exceeds the total value of the purchases, they need to follow the exchange’s guidance to buy more stocks to balance the accounts or “risk facing strict regulatory scrutiny.” On the first trading day of the new year, the Chinese stock market suffered the worst new year’s start since 2016.
Analysts indicated that China’s stock market is currently affected by three major selling forces. First, state-owned enterprises, who sell their shares to cash out as they face financial constraints. Secondly, foreign-funded institutions need to transfer funds to Hong Kong before remitting them out. Finally, there are long-term retail investors who have been trapped in the early years – they quickly sell to finally cash out.
Along with these new market interventions, China’s U.S. Treasury bond holdings has further reduced since last October, while China’s central bank continuously increased gold reserves. Observers pointed out that Beijing is getting prepared for Trump’s second term.
Source: RFA, January 7, 2025
https://www.rfa.org/mandarin/shangye/jingji/2025/01/07/chinas-stock-market/