Beijing Urged China’s Biggest Investor to Buy in Dip

Beijing urged country’s biggest investors to buy more stocks dip in an effort to step up confidence in the country’s  capital market.

The national securities regulatory issues the guidance on Thursday after meeting with investors including the country’s giant security fund at a time when the country’s benchmark index plunged almost the lowest in two years.

Chinese equites saw fund outflow of about $2.7 trillion of market value amid conners on fresh lockdowns and authorities failing to bring forward expected stimulus and crackdown in the tech sector.

“For a turnaround in sentiment, we need to see something sincere from policy makers, either a lot of extra liquidity, a major shift in the Shanghai situation, or a massive surprise that will breathe some new hope into the market,” said Wang Yugang, a fund manager at Beijing Axe Asset Management Co as reported by Bloomberg.

“Even in a critical year like this, a sound or robust stock market has quite a low priority because currently there’s no systemic risk.”

A similar call was made two weeks ago following another call in October 2019.

Overseas investors have pulled out net 5.6 billion yuan from mainland shares this month after offloading 45 billion yuan in March, underscoring the largest outflow in two years – according to Bloomberg’s data.

“Obviously, Beijing wants to stem the bearish sentiment about both the economy and the stock market,” said Castor Pang, head of research at Core Pacific Yamaichi, as reported by Bloomberg.

“But the economy is like a giant ship, and it takes time for it to turn around. Even if Beijing wants to talk up the market, it’s hard to change how investors are thinking.”