2024-02-13 04:12:00
After the Chinese New Year holiday, how will the “national team” continue to rescue the market? (Image source: Adobe Stock) Looking at Chinese websites, it is prohibited to create mirror websites. Return to the genuine Chinese website.
[Watch China, February 13, 2024](Watch China reporter Li Zhengxin’s comprehensive report) China’s stock market has lost a lot of blood, trillions of market values have evaporated, investors are complaining, and the chairman of the China Securities Regulatory Commission has been replaced. So how will the “national team” continue to rescue the market following the Chinese New Year holiday? It is forbidden to create mirror websites on Chinese websites. Return to the genuine Chinese website.
The market value of the stock market evaporated by 3 trillion yuan in just over a month, and the “national team” stepped in to rescue the market.
Chinese financial regulators have tightened trading restrictions, banning some quantitative hedge funds from issuing sell orders and banning other funds from cutting stock positions in their leveraged market neutral funds in an effort to curb stock market losses. The China Securities Regulatory Commission also stated that it will guide securities firms to adjust margin call levels, maintain “flexible” forced liquidation limits, and limit forced liquidations.
Previous measures have included restrictions on short selling and market intervention by a “national team”, while the establishment of a stock stabilization fund has also been considered.
The “national team” refers to a number of government-backed companies and institutions that the government sometimes uses to buy stocks and other assets.
According to information released on the website of Central Huijin Investment Co., Ltd. (Central Huijin) on February 6, Central Huijin stated that it fully recognized the value of the current A-share market allocation and has recently expanded the scope of trading open-end index funds (ETFs). , and will continue to increase its holdings, expand its holdings, and resolutely maintain the smooth operation of the capital market.
According to public information, Central Huijin is a wholly state-owned company funded by the state. It represents the state in exercising its rights and obligations to investors of key financial enterprises such as state-owned commercial banks in accordance with the law. It is known as the “Financial State-owned Assets Supervision and Administration Commission”. After the 2015 stock market crash, Central Huijin was also a pioneer in rescuing the market.
In addition to Central Huijin, public pension operating agencies such as the National Council for Social Security Fund are also considered to be in the “national team” camp.
The Wall Street Journal cited relevant data from Z-Ben Advisors as showing that in January, China’s five largest ETFs tracking the CSI 300 Index and the Shanghai Composite Index received a net fund of US$20.2 billion. Inflows were more than 10 times the monthly average last year. Market participants believe that this concentrated inflow of funds is a sign that China’s “national team” is in action. The report pointed out that “Investors are still skeptical regarding whether the ‘national team’ can end this round of decline in China’s stock market.”
Where will the “national team” aim next for its large-scale intervention?
The Hong Kong stock market will start post-Chinese New Year trading on February 14 and the mainland Chinese stock market will start on February 19.
On February 12, Nihon Keizai Shimbun wrote an analysis and pointed out that what attracts funds into the market is the purchase of the “national team” of listed ETFs (traded open-end index funds, or exchange-traded funds). Of particular concern is the ETF of China Southern Fund linked to the CSI 1000, a stock price index composed of small and medium-sized stocks.
The China Securities Regulatory Commission made it clear last week that it would “introduce more incremental funds into the A-share market and make every effort to maintain the stable operation of the market.” Subsequently, Central Huijin announced the news of additional purchases of ETFs.
A report by the US investment bank Goldman Sachs pointed out that three institutions including Central Huijin hold a total of approximately 3 trillion yuan (RMB, the same below) in Chinese stocks and ETFs, which is equivalent to approximately 4% of the total market value of China’s local listed companies.
Goldman Sachs believes that the goal of the “national team” intervention is to turn the stock market into a “source of wealth creation.” In China, 60% of personal household assets are real estate, while stocks only account for regarding 5%. In the case of long-term real estate price adjustment, if asset transfer is promoted, the stock market will be active and household wealth will also increase.
Nihon Keizai Shimbun said that in fact, it seems from the actions of the “national team” that the goal is to attract individual investors.
Fundamental doubts remain as to whether the state’s purchasing intervention will lead to a full recovery in the stock market. Redmond Wong, a strategist at Saxo Capital Markets in Hong Kong, compared this time to the “national team” buying behavior during the 2015 stock market crash. It is believed that even an intervention of 1.3 trillion yuan will not be able to bottom out the stock market. To turn bullish, one needs to be convinced that underlying growth is improving.
“Broker butcher” takes office China Securities Regulatory Commission is busy issuing fines
On February 12, Chinese state media CCTV Finance reported that the official website of the China Securities Regulatory Commission published the first administrative penalty decision in 2024, which mainly involves Ruihua Accounting Firm (Ruihua Firm) and relevant responsible personnel.
When Ruihua audited Kangdexin’s annual financial statements from 2015 to 2017, it violated the relevant professional standards and failed to perform its obligations of diligence. Ruihua was ordered to make corrections, its business income of 5,943,396 yuan was confiscated, and a fine of 11,886,792 yuan was imposed. Relevant responsible personnel will be warned and fined 60,000 to 100,000 yuan.
On New Year’s Eve, February 9, the China Securities Regulatory Commission issued a notice on its website, disclosing two administrative penalty cases:
One is the first fraudulent issuance case investigated by the China Securities Regulatory Commission since the implementation of the new Securities Law, following the issuer submitted application materials but before being registered. The China Securities Regulatory Commission imposed administrative penalties on Shanghai Silxin Technology Co., Ltd. (formerly known as Shanghai Guowei Silxin Technology Co., Ltd.) for its illegal issuance of fraudulent issuances during its application for initial listing on the Science and Technology Innovation Board.
Another penalty is to crack down on the violations of multiple securities practitioners. Investigating illegal activities such as stock trading by multiple employees of China Merchants Securities, administrative penalties were imposed on 63 people, with a total fine of 81.73 million yuan; one person was banned from the securities market for life; and one person was transferred to judicial authorities for suspected insider trading. ; Administrative supervision measures will be taken once morest 46 people, of which 3 people will be identified as inappropriate candidates, 5 people will be subject to supervisory interviews, and 38 people will be issued warning letters.
The announcement of the above-mentioned penalties was issued at the time when Wu Qing, known as the “brokerage butcher” in the industry, took over as chairman of the China Securities Regulatory Commission.
China’s official Xinhua News Agency reported on February 7 that following the stock market plummeted for several days, the China Securities Regulatory Commission (China Securities Regulatory Commission) underwent major personnel changes. Yi Huiman, the chairman of the China Securities Regulatory Commission, was dismissed and replaced by the former Shanghai Municipal Government. Vice Mayor Wu Qing took over.
Wu Qing, 59, is a native of Mengcheng, Anhui Province. He has a financial background and has worked in the financial system for a long time. Public resumes show that Wu Qing studied finance at Shanghai University of Finance and Economics (the predecessor of Shanghai University of Finance and Economics), finance and finance at Renmin University of China, and received a doctorate in economics.
In 2005, Wu Qing served as the director of the Securities Company Risk Management Office of the China Securities Regulatory Commission, specializing in the risk management of problematic securities companies. He had a tough style and was called the “broker butcher” by the industry. During his tenure, he dealt with 31 illegal securities companies, including Southern Securities, Minfa Securities, and “Delong” securities companies, effectively resolving the imminent securities market crisis at that time.
In March 2009, Wu Qing began to serve as the director of the fund department. Soon following taking office, he cracked down on “rat warehouses”. From the “Zhang Ye case” of Rongtong Fund in June 2009 to the “Liu Hai case” and the “Tu Qiang case”, many fund professionals have been investigated for “rat warehouses”.
China’s official media Beijing News quoted Teng Tai, director of the Wanbo New Economic Research Institute, as saying that Wu Qing understands the supervision of securities firms, public funds, private funds, trading issuance registration and listed companies. This is the first time in 20 years that experts have been allowed to to lead the capital market.
At present, there are 220 million stock investors and over 700 million fund investors in China, with the majority of small and medium investors being the most important participants. How to build an investor-oriented capital market so that investors can have returns and a sense of gain is an important issue before Wu Qing.
Throughout the Year of the Rabbit, the Shanghai Composite Index fell by 12.22% and the Shenzhen Component Index fell by 26.38%. Despite rising prices for three consecutive days before New Year’s Eve, investor concerns remain.
Source: Look at China
Short URL: All rights reserved. Reprinting in any form requires permission from this website. It is strictly prohibited to create mirror websites.
[Honorary Members Wanted]Streams can merge into the sea, and small kindnesses can achieve great love. We sincerely recruit 10,000 honorary members from Chinese people all over the world: each honorary member only needs to pay a subscription fee per year and become an honorary member of the “Look at China” website, which can help us break through censorship and blockade and provide services to at least 10,000 mainland Chinese compatriots. Provide independent and true key information to warn them in times of crisis and save them from pandemics and other social crises.
1707834776
#national #team #aim #rescue #stock #market #Chinese #Year #Picture #Market #bailout #Investment #China #Securities #Regulatory #Commission #ETF #Central #Huijin #Financial #Observation
