Chinese regulators hold talks on market support tools: Media
The benchmark CSI300 Index slumped 8.5% in October for its worst month since early 2016.
Chinese regulators, including the central bank, are set to meet with financial institutions on November 2nd to discuss market support tools, following a sharp decline in stocks and bonds. The benchmark CSI300 Index dropped 8.5% in October, marking its worst month since early 2016. Signs of stress have also emerged in the bond market, particularly concerning the financial health of state-owned developer Zhuhai Huafa Group.
On the morning of November 2nd, the People's Bank of China, the National Financial Regulatory Administration, and the China Securities Regulatory Commission will convene major banks to discuss optimizing the relending policy for share buybacks and purchases. Huang Yan, a fund manager, believes that regulators may encourage more lending to support share buybacks, potentially driving a market rebound toward the end of the year.
However, he warns that a policy bottom may not coincide with a market bottom. Share buybacks have been on the rise, with many companies announcing them in recent months. Despite state-backed buying, the market slide has continued due to an ailing economy and concerns over high tech company valuations. Investors are also watching the debt issues of Zhuhai Huafa Group, which saw its bonds and shares decline after the company failed to repay two maturing trust products and discussed extending loan maturities.
The incident has raised concerns about potential contagion, with most credit bond funds losing roughly 0.5% on October 30th, their largest one-day percentage loss. Hua Chuang Securities noted that the selloff in Huafa bonds had triggered risk aversion and fund redemptions, highlighting the impact of the government's attitude and material support on the market.
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