China's state-favored funds draw billions, and stocks sink deeper into a bear market anyway
Funds favored by Beijing's 'national team' took in 46 billion yuan on Thursday, the most since April 2025, but the CSI 300 kept falling Friday as stimulus hopes faded and AI trades cooled.
By James Mitchell ·
For information only, not investment advice.
Beijing's market support crew showed up with a big checkbook on Thursday. Chinese stocks kept falling anyway. The CSI 300, which tracks 300 of the largest stocks in Shanghai and Shenzhen, entered bear-market territory on Thursday, down 20% from its June peak, and slid further on Friday.
Bloomberg reported the index fell as much as 1.6% on Friday, taking the week's losses to nearly 5%, the most in three months, after breaking through the closely watched 4,000 level. The South China Morning Post said it fell as much as 2% before trimming losses by the midday break.
That's despite heavy buying. Exchange-traded funds favored by China's so-called national team, the state-backed investors Beijing leans on to steady markets, saw net inflows of 46 billion yuan ($6.89 billion) on Thursday, the most since the April 2025 rout, according to Bloomberg-compiled data. Bloomberg said state buying is doing little to stem the slide, with investors reluctant to step in on valuations alone. There's no official confirmation that state funds are behind the purchases.
The SCMP tied Friday's drop to waning hopes for fresh stimulus from Beijing and a global retreat from AI-related trades. The chipmaker-heavy Star Market 50 slumped 3.1%. CNBC noted China's weakest industrial-profit growth of the year in September and its slowest economic growth in more than three years in the second quarter.
“Cheapness alone is not the catalyst,” Jade Fu of UBS Asset Management said on Bloomberg TV. Shaun Rein of China Market Research Group told CNBC it's “a crisis of confidence right now not a crisis in the economy,” and predicted a strong rebound in Chinese equities in 2027. That's a forecast, not a fact.
Sources
- China Stocks Sink Deeper Into Bear Market Despite State Buying (Bloomberg, syndicated), CNBC TV18 / Bloomberg
- China's CSI 300 enters bear market, CNBC
- China's bear market rout deepens as growth concerns and AI sell-off spur caution, South China Morning Post
Tags: china · markets-moves · ai · semiconductors