(Bloomberg) - Chinese authorities sought to put a floor under the nation’s slumping stock market by limiting share sales by some mutual funds, people familiar with the matter said.
The market regulator gave window guidance to some big mutual fund houses, telling them to refrain from selling A-shares on a net basis on Monday, according to the people who asked not to be identified discussing private information. The verbal request, which has become a regular operation to prevent panic selling, was valid for the day, said the people.
The intervention has done little to ease the broad selloff in Chinese equities, with the benchmark CSI 300 Index falling 3.1% to the lowest since March 15. Local stocks are facing renewed pressure after a brief respite from Beijing’s mid-March pledge to stabilize markets, as a worsening Covid outbreak at home mars the outlook for growth and earnings.
The China Securities Regulatory Commission didn’t immediately respond to a request seeking comment.
Covid lockdowns and ensuing disruption to businesses have emerged as the largest and latest risk to China’s stock market. Economists surveyed by Bloomberg now forecast 5% expansion in the Chinese economy this year, well below Beijing’s annual target of 5.5%.
The nation’s financial hub Shanghai reported more than 26,000 new Covid infections for Sunday, an all-time high, as the outbreak continues despite extended lockdowns. The city, home to more than 1,600 financial institutions as well as the nation’s largest stock exchange, remains largely sealed off with most traders confined to their residential blocks.
Authorities in recent weeks have made repeated vows to stabilize the economy, fanning speculation that an interest rate cut or other easing measures could come as early as this week.
Meantime, the CSI 300 is down 17% so far this year. That compares with a 10% fall in the MSCI Asia Pacific Index and around 7% drop for the MSCI’s measure of global stocks.
By Bloomberg News
