In response to sharp declines in its stock market, China has taken steps to boost investor confidence and stabilize trading.
State-owned firms and financial institutions have announced stock purchases and buyback plans, following a steep 7.3% drop in the Shanghai Composite Index on Monday.
China’s sovereign wealth fund unit, Central Huijin, stated on Tuesday that it is purchasing more index exchange-traded funds (ETFs) to help support the market. The People’s Bank of China pledged financial support to Central Huijin if needed to ensure liquidity and market stability.
Several other state-backed investment firms, including China Chengtong Holdings Group and China Reform Holdings Corp, also committed to increasing their investments in stocks and ETFs. China Reform Holdings announced an initial investment of 80 billion yuan ($10.95 billion) to strengthen key industries, including technology and state-owned enterprises.
Major state-owned companies have launched share buyback programs to reassure investors. Leading oil company Sinopec announced plans to repurchase $273 million to $409 million worth of shares over the next 12 months. Similarly, China Electronics Technology Group and several other listed firms—including Orient Securities, Intco Recycling Resources, and Spring Airlines—revealed plans for share buybacks.
China Pacific Insurance Group also pledged to increase its investment in strategic sectors to help stabilize the market.
Following these interventions, the Shanghai Composite Index showed modest gains in early Tuesday trading, recovering part of Monday’s losses. The market downturn was triggered by escalating trade tensions between China and the US, after Washington imposed new tariffs on Chinese goods, which Beijing countered with retaliatory measures.
The Wall Street Journal, Reuters, and Bloomberg contributed to this report.
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