China Says National Team Is Buying, Not Selling, as Stocks Fall

(Bloomberg) -- China’s securities regulator said the market misinterpreted recent news about five state-backed funds liquidating their stock holdings, assuring investors that “relevant institutions” have actually increased their positions.

The rare government comments about China’s “national team” of state investors, delivered in a brief statement on the China Securities Regulatory Commission’s website Monday, follow a $3.2 trillion selloff in local shares that has rattled investor confidence in Asia’s largest economy.

Traders were left guessing over Beijing’s intentions to support the market last week after news that five funds linked to the Chinese government had sold all their holdings of equities and bonds in the third quarter. The funds’ quarterly reports didn’t explain why they sold, or whether the transactions signaled a withdrawal of government support for the market.

Some analysts have speculated that the government redistributed money from the liquidated funds to other parts of the market. People familiar with the matter told Bloomberg on Thursday that China’s state investors have been buying stocks in a targeted fashion over the past week.

The five funds in question were all set up in the summer of 2015 with money from China Securities Finance Corp., and their purpose was to purchase stocks to staunch a market rout, according to local media. Quarterly filings last week showed the funds held no stocks as of Sept. 30.

While China’s government plowed billions of dollars into shares three years ago, authorities have this time around taken a more measured approach, focusing primarily on helping cash-strapped companies gain access to financing. President Xi Jinping earlier this month vowed “unwavering” support for non-state firms, while the country’s stock exchanges committed to help manage margin-call risks tied to shares that have been pledged as collateral for loans.

To contact Bloomberg News staff for this story: Zhang Dingmin in Beijing at dzhang14@bloomberg.net

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