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Hope Restored As China State Fund Buys Bank Shares

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Today’s News

Hope has returned as China’s sovereign wealth fund has increased its stake in 4 of the nation’s biggest banks for the first time since 2015, stoking speculation that authorities will intensify efforts to prop up its sinking stock market.

State-owned Central Huijin Investment Ltd. bought approximately USD 65 million worth of shares in Bank of China Ltd., Agricultural Bank of China Ltd., China Construction Bank Corp. and Industrial and Commercial Bank of China Ltd., according to filings yesterday. Huijin, a unit of the USD 1.4 trillion China Investment Corp., plans to further increase holdings over the course of the next six months.

A growing number of Chinese economists and hedge funds are calling on the government to directly intervene with a stabilization fund to buy stocks, a move the authorities have refrained from since the 2015 market crash. Concerns are now mounting among China’s top leadership over the trajectory of the world’s second-largest economy as a deepening property crisis and rising deflationary pressure puts the growth goal of around 5% for the year at a detrimental position.

China’s benchmark CSI 300 Index has retreated more than 5% this year even as hopes of fresh economic stimulus bolstered equities yesterday. The financial sub-gauge is down by 1.5% for the year, on track for a third year of losses. Previous measures to support growth and the property market have done little to lift sentiment as foreign funds kept selling.

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China’s Sovereign Wealth Bank Intervenes

China’s sovereign wealth fund has raked up shares in 4 of the nation’s biggest lenders and said it plans to continue the purchases, a move apparently aimed at boosting the stocks.

Source: Bloomberg

State-owned Central Huijin Investment Ltd. said in filings to the Shanghai stock exchange that it raised its stakes in Bank of China Ltd., Agricultural Bank of China Ltd., China Construction Bank Corp. and Industrial and Commercial Bank of China Ltd. It added that it would ramp up purchases over the next six months, without saying to what extent.

A Sigh Of Relief For China’s Credit Market

Strains in China’s credit market have lessened after local defaults fell to the lowest this year. Conditions also improved after declines in home sales eased slightly amid a broader property debt crisis.

Source: Sky News

Onshore stresses eased in September to its lowest point since November 2022, dropping to level 2 from 3. The gauge indicates rising levels of financial strain. Helping the measure was just one bond payment being missed last month, involving a 200 million yuan (USD 27 million) note from Wuhan Dangdai Science & Technology Industries (Group) Co., according to reports.

Asia Stocks Gains Alongside U.S.

Asian shares opened higher after U.S. stocks rose for a fourth consecutive day as traders shrugged off a hotter-than-estimated wholesale inflation reading.

Source: TVS

Benchmark indexes climbed around 0.7% at the open in Japan and South Korea, while Australian stocks held on to small gains. Traders will also be keeping an eye on China stocks after the nation’s sovereign wealth fund increased its stake in 4 of the nation’s biggest banks for the first time since 2015 yesterday. The announcement will likely keep speculations high about broader support and more government efforts to rescue the stock market.

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