(Bloomberg) -- China intervened to support its stock market on Friday, people familiar with the matter said, after fears of a trade war with the U.S. sparked the steepest intraday selloff in six weeks.
State-backed funds bought large-cap stocks including China Petroleum & Chemical Corp. and China Life Insurance Co., intensifying purchases in the afternoon, said the people, who asked not to be identified discussing private information. Both shares erased losses late in the trading session, while the large-cap CSI 300 Index pared its drop to 2.9 percent from 4.6 percent.
China’s so-called National Team of state funds has a long history of smoothing swings in the country’s $7.7 trillion stock market, particularly during big down days. While the interventions are meant to protect individual investors and prevent excessive volatility, critics say government meddling creates moral hazard and undermines official pledges to move toward a more market-driven economy.
The latest bout of turbulence came after U.S. President Donald Trump outlined fresh tariffs on $50 billion of Chinese imports and said there’s more on the way. Hours later, China unveiled tariffs on $3 billion of U.S. imports in response to steel and aluminum duties ordered by Trump earlier this month.
The China Securities Regulatory Commission didn’t immediately respond to a faxed request for comment.
©2018 Bloomberg L.P.
With assistance from Steven Yang