Surge of inflows into China ETFs fuel state buying speculation – reports

Figures from Z-Ben, a Chinese consultancy, cited in a report by the FT revealed the four ETFs, which track China’s CSI 300 index, now hold assets under management exceeding $25bn, following a surge of inflows over an eight-day period.

The largest ETF, Huatai-PineBridge CSI 300 ETF, has now surpassed $13.8bn, or CNY 100bn, making it the first non-money market ETF to do so in the region.

The rapid inflows have led some to speculate the funds may have come from China’s ‘national team’, a term coined in 2015 after state-owned allocators intervened in the stock market.

Speaking to the FT, Ivan Shi, head of research at Z-Ben, said the flows over the past two weeks were “different” but it was hard to know their source.

“Whether it is the national team or not, I do not know. But I suspect there might be some national team element in there,” he said.

On 24 July, the Chinese politburo met and pledged to boost the economy and “expand consumption by increasing residents’ income”.

Since the politburo meeting, the CSI 300 has risen 1.3%, but spiked almost 3% in the day following the meeting, according to data from Morningstar Direct.

The other ETFs affected by the strong inflows come from ChinaAMC and Mackenzie, Harvest and DWS, and E Fund, the latter of which is 100% domestically-owned.

Other central banks have previously taken a similar strategy, with the Bank of Japan buying equity ETFs in 2010 as part of their monetary easing programme.


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