Chinese state fund Central Huijin Investment bought at least $41 billion of blue-chips in the first quarter to prop up the falling stock market, the fund’s latest quarterly report showed.

Sovereign funds bought at least 300 billion yuan ($41.42 billion) of exchange-traded funds (ETFs) in the first quarter, including Huatai-PB CSI300 ETF, E Fund CSI300 Index ETF, Harvest CSI 300 ETF, ChinaMC CSI 300 ETF and ChinaMC Are. China 50 ETFs, ETF report shows.

The buying helped China’s CSI300 blue-chip index bounce back about 14% from a five-year low in February. Market-friendly policies and the replacement of China’s top securities regulator also helped the surge.

Central Huijin said in early February that it has expanded its scope of investment in Chinese ETFs and will further increase such investments to safeguard the stable operation of China’s capital markets.

The announcement came as the stock benchmark CSI 300 fell to a five-year low as China’s weak economic recovery and the lack of vigorous government stimulus eroded investor confidence.

Central Huijin bought 26.3 billion units of the Huatai-PB CSI300 ETF in the first quarter, worth about 87 billion yuan ($12.01 billion), based on Reuters calculations, fund reports on Monday showed.

State funds include about 73 billion yuan ($10.08 billion) in the E Fund CSI300 Index ETF and 53 billion yuan ($7.32 billion) in the Harvest CSI300 ETF, according to Reuters calculations.

Investors were skeptical that purchases by state institutions were helping the market.

In January, S&P Global Market Intelligence found that more than $17 billion flowed into Chinese-domiciled ETFs tracking the CSI 300.
Goldman Sachs also observed heavy buying of domestic ETFs by suspected “national team” state-affiliated investors.

The ChinaAMC CSI 300 ETF also saw purchases of $7.73 billion from Central Huijin, and the ChinaAMC China 50 ETF saw purchases of $4.97 billion in the first quarter, their reports showed.


bid to raise the markets

– Sovereign funds bought at least 300 billion yuan of exchange-traded funds in the first quarter



– Buying helped China’s CSI300 blue-chip index bounce back nearly 14% from five-year low



– The rebound was also helped by several market-friendly policies

China’s Q1 fiscal revenue fell due to tax cut policies

China’s fiscal revenue in the first quarter fell 2.3% from a year earlier, the Finance Ministry said on Monday, hit by certain factors including previous tax cut policies.

 

Data last week showed the world’s second-largest economy grew faster than expected in the first quarter, providing some relief to officials, but March indicators showed domestic demand remains weak. Analysts said the decline in assets was impacting the finances and fiscal capabilities of local governments.

China’s tax revenue fell 4.9% to 4.9 trillion yuan ($676.48 billion) in the first three months, but revenue from cultural, tourism and advanced manufacturing industries rose sharply, Vice Finance Minister Wang Dongwei said at a news conference in Beijing on Monday. .

Excluding the impact of special factors such as a high base and 2023 tax cut policies, China’s fiscal revenue grew about 2.2% in the first quarter, he said.

According to Wang, fiscal spending rose 2.9% in the first three months to about 7 trillion yuan, much slower than the 6.7% growth seen in the first two months.

Responding to a question about the slow pace of local government special bond issuance in January–March, Wang Jianfan, a ministry official, said the issuance depends on the funding needs of local projects, seasonal effects on construction conditions and the bond market. Was related to interest rates. ,

He said that in response to the impact of Covid earlier, the ministry had also increased the volume of such bond issuances at the beginning of each year, indicating that this had created a higher base.

The Finance Ministry will support technology-based industrial innovation with “full support” and promote technology innovation and manufacturing development with tax and duty reduction policies, Wang said.

Beijing has begun investing in high-tech manufacturing this year to boost the economy amid weak domestic demand and an asset crisis.

“We will strengthen macro controls to improve the quality and efficiency of fiscal policies and enhance economic recovery, focus on boosting domestic demand, develop new growth drivers and contain and mitigate risks,” he said.

The deputy minister said the trillion yuan of sovereign bond funds issued last year had been delivered to local governments by the end of February. Specifically, spending from funds on disaster prevention and emergency management increased by 53.4% ​​in the first quarter.

In recent days, record-breaking rainfall has led to flooding in some cities in southern China’s densely populated Pearl River Delta.

first published: 22 April 2024 | 11:51 pm First


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