ETF trading volume surges, Chinese stocks rebound in the afternoon

(Bloomberg) — China’s stock market benchmark rebounded in afternoon trading, with volume rising sharply at some major exchange-traded funds, fueling speculation that buying by state funds may be behind the reversal.

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Trading volume for the Huatai-Berry CSI 300 ETF surged to 15.3 billion yuan ($2.1 billion) on Thursday, the highest level since 2015, while trading volumes for the Harvest CSI 300 ETF and E Fund CSI 300 ETF also grow rapidly. The benchmark CSI 300 index of mainland stocks ended up 1.4% after falling 1.8%.

“The national team may take steps to stabilize the market, as they did in previous market crashes,” said Marvin Chen, a strategist at Bloomberg Intelligence. “The recent rebound in the A-share market It is also accompanied by northbound Shanghai-Hong Kong Stock Connect inflows, which may be driven by bargain-hunting activity.”

The Hang Seng China Enterprises Index rose 1.3%, reversing earlier losses.

Read: Risks abound, China stock market rout shows no signs of slowing down

Chinese indicators rose in a rare move as the sell-off extended into the new year amid lingering doubts about the market outlook. Latest economic data showed the housing crisis in the world’s second-largest economy is deepening, while geopolitical tensions with the United States continue to unnerve investors.

The Hang Seng China Enterprises Index is down 10% this year, making it the world’s worst-performing major index.

During the previous market downturn, state funds came to rescue the market, and they were once suspected to be behind the increase in the trading volume of such ETFs. For example, wealth sovereign fund Central Huijin Investment Co., Ltd. bought ETFs in October for an unknown amount. And vowed to continue to increase holdings.

Read: China ETF record volumes fuel government buying speculation

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