According to a Reuters report citing sources familiar with the matter, China’s primary stock exchanges have reportedly urged several major mutual funds to limit their stock sell-offs at the beginning of the year, marking a part of efforts by authorities to steady markets amidst a challenging phase for the country.
The Shanghai and Shenzhen exchanges reportedly reached out to at least four prominent mutual funds on December 31 and January 2 and 3, urging them to ensure daily stock purchases surpassed sales.
This came as Chinese stocks began 2025 with significant declines, fueled by concerns that incoming U.S. President Donald Trump might enact substantial tariffs on Chinese imports, thereby intensifying pressure on an economy already experiencing sluggish growth.
One source indicated that while the funds were permitted to sell stocks, they were instructed that if sales exceeded purchases, they should quickly acquire additional stocks to balance the difference.
On the first trading day of 2025, the CSI 300 Index, representing China’s blue-chip stocks, dropped 2.9%, marking its most disappointing start to a new year since 2016, following a loss of over 5% the previous week.
With just a fortnight until Trump’s second term begins, his proposed hefty tariffs on Chinese products have caused disruptions in the yuan’s value and negatively impacted mainland bond yields and stock prices.
Last year, Chinese stocks experienced their first yearly rise since 2020, ending the year with a 14.7% increase. However, much of this growth was attributed to a short-lived rally following the announcement of a stimulus package in September.
Meanwhile, at the early stage of 2024, the securities exchanges made similar appeals to funds to help support the markets as Chinese stocks plummeted to five-year lows.