China Contemplates $278 Billion Stimulus to Boost Stock Market

23 Jan, 2024

Chinese authorities are reportedly exploring measures to revive their struggling stock markets, contemplating a rescue package backed by offshore funds.

According to Bloomberg, they aim to secure approximately 2 trillion yuan ($278 billion) primarily through offshore accounts of Chinese state-owned companies. The funds would be utilized to stabilize the market by purchasing stocks onshore through Hong Kong markets

.As part of the strategy, Chinese policymakers have set aside 300 billion yuan from local funds to invest in onshore shares through state-owned financial firms like China Securities Finance Corp. or Central Huijin Investment Ltd.The CSI 300 index in mainland China experienced an 11.4% decline in the past year, marking its third consecutive year of falls. Similarly, Hong Kong's Hang Seng index plummeted nearly 14% in 2023, becoming the worst-performing major Asian stock market.

This news follows Chinese Premier Li Qiang's recent statement during a state council meeting, where he emphasized the need for robust measures to stabilize and boost confidence in the stock markets. However, no specific details about the amount of mobilized funds or the timing of implementation were disclosed.

Li previously highlighted China's cautious approach to economic development, emphasizing a focus on internal drivers rather than relying on massive stimulus. Despite global economic challenges, China achieved a 5.2% GDP growth in 2023, reinforcing its commitment to stable and healthy capital market development. Further details on the proposed measures are awaited, with no indication provided during the recent state council meeting.

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