‘National team’ takes a back seat as mainland China market turmoil drags on
One strategy that is gaining traction is to stop people selling
Once such a fixture in mainland China’s stock markets that investors scrutinised exchange filings for its footprints in the hope of gaining a trading edge, the so called “national team” appears to have taken a back seat in recent months.
Brokers who follow trading patterns on the mainland say that the national team – a moniker for state-sanctioned equities buying by Chinese financial institutions to support trading levels – has mostly stopped buying as benchmark indices fall to new 14-month lows.
Ivan Li, an equities analyst at Tung Shing Securities in Hong Kong, says the government is instead focusing on the yuan exchange rate as “they realise this is the source of uncertainty” given swings in a country’s currency have a greater impact on an economy that a concurrent movement in the stock market.
The term “national team” was popularised last summer when mainland Chinese markets went into a tail spin prompting regulators to require major investors hold the line. Fund managers and company directors at major firms were told to buy more stocks, short selling was restricted, and a probe into insider trading was launched, netting dozens of senior financial sector executives.