China’s in trouble. (Yeah we know and ‘water is wet’)
But this time it’s for real.
Having strong-armed funds into ‘not selling’ stock last week, then strongly-suggesting that companies escalate their share buyback programs (and then bullying banks into buying yuan to support the currency against the green back), Beijing was faced with the reality that nothing was working with Chinese stocks tumbling still.
Until last night…
Chinese stocks suddenly staged a major comeback in the afternoon session after touching their lowest levels since November earlier in the day…
Bloomberg reports that speculation was rife as stocks jumped, with many market participants talking about the possibility of buying by state-backed funds.
“Most people I spoke to were quite baffled by the move this afternoon. There were all kinds of speculations but there has been no clear explanation,” said Willer Chen, senior analyst at Forsyth Barr Asia Ltd.
But “it is also reasonable to see some technical rebound” given the steep losses recently, he added.
Some other traders cited a Caixin report from Saturday, which said China is considering stronger action to address risks from local government financing vehicles, but that was not ‘new’ news.
“There simply are no obvious triggers. The only potential explanation that seems to make sense is that the National Team has been active,” said Brock Silvers, Hong Kong-based chief investment officer at private equity firm Kaiyuan Capital.
The point being that China has already resorted to its ‘plunge protectors’ – and with capital outflows soaring, one wonders just how far and fast Beijing is willing to go.
