China steps up stock market rescue as record ETF inflows signal support

By Bloomberg News

 

Chinese exchange-traded funds received record inflows as state-backed buyers pulled out all the stops to shield the market against Donald Trump’s tariff onslaught.  

Equity ETFs listed onshore saw nearly $24 billion in net inflows last week, eclipsing a prior record of around $23 billion set in October, data compiled by Bloomberg show. The bulk of the purchases went into ETFs known to be favored by China’s so-called national team.

 

The surge in inflows underscores the urgency with which Chinese authorities responded as share prices stumbled in response to the evolving trade war. The People’s Bank of China said last week it will provide sufficient liquidity to Central Huijin Investment Ltd., the sovereign fund, which billed itself as a “stock stabilization fund.” The purchases appear to have worked, at least for now — the CSI 300 Index is set to rise for the fifth session following last Monday’s 7.1% slide.  

 

“The first real battleground of the tariff war is financial markets, especially stock markets,” said Lu Ting, chief economist for China at Nomura International HK Ltd. “We expect China’s stabilization funds, supported by the PBOC, to intervene significantly in stock markets over coming weeks.

 

There were likely dip buyers too. Among the most-purchased ETFs last week, those including the Fullgoal CSI Hong Kong Connect Internet ETF haven’t been linked to state-fund buying in prior episodes, suggesting retail money may have been in action. 

 

Most of the state purchases came on Monday and Tuesday, with a group of eight ETFs typically favored by the national team seeing modest outflows in the final two days of the week.

 

In all, state-backed ETF purchases this year may exceed the record of more than $100 billion set in 2024, according to Bloomberg Intelligence. 

 

“Given that we’re in just the early stages of the fallout from US President Donald Trump’s tariff avalanche, 2025 could well be a record year for China’s ETF assets under management, due to the continual support of China’s state-backed investment funds,” BI’s senior ETF analysts Rebecca Sin and Eric Balchunas wrote in a note.

 

Chinese equities climbed on Monday as investors zeroed in on a temporary pause in import duties on a range of consumer electronics including smartphones. While that extended the CSI 300’s run of gains, the benchmark is yet to recover losses incurred from last Monday’s historic rout.