China boosts market defense through state fund purchases and company buybacks
A basket of nine exchange-traded funds saw 76.7 billion yuan in inflows on Tuesday as the government rolls out liquidity measures.
State-backed funds and companies have increased market support in China through higher purchases and buyback plans, according to Mint.
A group of nine exchange-traded funds favoured by the national team of investors received 76.7 billion yuan in inflows on Tuesday. This was the second largest inflow on record and the highest since April 8, 2025.
The buying spike followed the government's rollout of liquidity-injection measures this week. On Wednesday, the tech-heavy Star 50 Index stabilised after a nearly 4% fall in the previous session, while the CSI 300 Index dropped 0.3%.
The People’s Bank of China (PBOC) announced it would cut the rate on its relending facility to 1% from 1.25% and make the programme permanent. This facility offers low-cost central bank funding to banks for loans used by companies for share buybacks and stake increases by major shareholders. The PBOC stated that Chinese banks have applied for more than 200 billion yuan in relending quotas.
Several companies disclosed new buyback plans, including Ningbo Joyson Electronic Corp., Universal Scientific Industrial Shanghai Co., and Hwatsing Technology Co. Ningbo Joyson proposed a buyback between 150 million yuan and 300 million yuan. CXMT Corp. chairman proposed increasing its share buyback to between 2.5 billion yuan and 5 billion yuan to protect investor interests.
Suzhou Dongshan Precision Manufacturing Co. controlling shareholders proposed returning at least 1 billion yuan to investors in 2026 through dividends and buybacks. Leonid Mironov, a portfolio manager at Gavekal Capital, said companies are not meant to be the core buyer for a long period and should instead provide a floor during selloffs.
