Chinese regulators have instructed at least two state-owned insurance companies to limit their stock sales, in an effort to stabilise the falling domestic stock market, anonymous sources have told Bloomberg.
The guidance, believed to have been issued on Monday, aims to curb the selling of more onshore shares that are purchased, a move that has traditionally been reserved for major mutual funds.
The Chinese and Hong Kong stock markets have seen a significant decrease in market value, dropping by over US$6 trillion since their peak in 2021. In response, Chinese authorities are reportedly considering the mobilisation of approximately 2 trillion yuan (US$279bn), primarily from state-owned enterprises’ offshore accounts, to establish a fund dedicated to purchasing shares and stabilising the market.
The initiatives align with a series of interventions introduced since mid-2023, aimed at bolstering market confidence and injecting long-term funds to support market stability. The measures have included suspensions on short selling by the nation’s largest, state-owned broker, state purchases of bank shares, informal requests for the prioritisation of equity funds, and various regulatory adjustments.
Authorities’ efforts to support the stock market reflect the broader challenges facing China’s economy, including the risk of a deflationary cycle. The decision to extend restrictions to insurers underlines the gravity of the situation and the government’s commitment to prevent further market declines.
