Chinese market regulators have told some institutional investors to stop selling shares listed on the Shanghai and Shenzhen stock exchanges in a bid to reverse a recent downturn, according to a report.
Authorities in China have issued private instructions — called ‘window guidance’ — to certain institutional investors that they must refrain from selling more equities than they buy on certain days, according to market participants speaking to the Financial Times.
The measures are aimed at reversing a decline in China’s benchmark CSI 300
XX:000300
stock index that started in the first week of 2024 that has seen the value of the country’s 300 most valuable stocks drop 4% this year and by 20% over the last 52 weeks.
Following pressure from Beijing, the China Securities Regulatory Committee (CSRC), and Shanghai and Shenzhen stock exchanges previously introduced similar selling limits in October, which helped drive a 3% uptick in value of the CSI 300 index, according to the report.
Those measures were, however, eased at the start of 2024 for some smaller funds, in a shift that led to a sell off in Chinese markets which contributed to the decline in the value of the CSI 300 at the start of this year.
Authorities have now reintroduced those trading limits in order to stem the recent decline, the report said.
MarketWatch contacted the CSRC, Shanghai Stock Exchange and Shenzhen Stock Exchange for comment.
China’s bid to slow decline in its stock markets comes as investors are now looking ahead to Wednesday, in preparation for the Chinese government’s publication of its annual economic data, which is expected to show the country met its growth targets for 2023.
The National Bureau of Statistics of China data is expected to show Chinese gross domestic product grew 5.2% in 2023, compared to the Chinese government’s target for 5% annual growth, according to 58 economists polled by Reuters.
China’s economic growth is, however, expected to slow to rates of 4.6% in 2024 and to 4.5% in 2025, in a slowdown that is set to increase pressure on the Chinese government to introduce new stimulus measures aimed at boosting the country’s economy, Reuters’ polls show.
