The Strategist

The government of China is buying up billions of shares

08/06/2015 - 18:49

Chinese state funds bought up shares in the amount of about $ 144 billion from the local stock market. This is about half of the funds allocated by the authorities to support the market, that has experienced several landslides over the past two months.

Today it became known that in the past two months, the Chinese government has spent $ 144 billion on the purchase of shares from the stock market in the country. According to estimates of the US investment bank Goldman Sachs, is only 2.2% of the total market capitalization of the stock market of China and about half of all funds, allocated by the authorities to support the market. As we already know, over the past two months, China's stock markets have experienced several large drops of investors' concerns over a slowdown in the Chinese economy and uncertainty in the fact that the authorities will soon remedy this situation. Uncertainty continues to put pressure on investor sentiment and now the Hong Kong, Shanghai and Shenzhen stock exchanges were down 0.6-0.9%at the end of today's trading.

The unstable situation in the stock market of China has led to the fact that in July about 20 million Chinese retail investors withdrew their funds from the market. This became known after the release of the state China Securities Depository & Clearing Corporation’s data. If the end of June, 75 million retail investors held the depository of funds in the accounts of the company, but in the end of July the number had fallen to 51 million. It became known yesterday that the Chinese authorities are preparing a new state support for the economy. According to the State publication Economic Information Daily, in the near future, the authorities will release bonds worth 300 billion yuan ($ 48 billion), the proceeds of which will go to infrastructure projects, which should revive the construction market and the labor market.


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