Beijing Tells Big Money to Buy and Stop Selling
China's financial regulators met on Thursday (Oct 15) to discuss measures to steady the stock market, Bloomberg reported. Authorities urged listed companies and state funds to buy shares while guiding some investors to curb selling. People familiar with the matter framed the push as coordinated intervention, reflecting mounting concern in Beijing over market fragility and an effort to stop selling pressure from cascading.
Regulators issued window guidance to several major insurers, instructing them to report their equity holdings, refrain from locking in losses on underwater positions, and align investment decisions with broader economic goals. The so-called national team — state-backed funds — was asked to accelerate stock purchases.
The national team had already moved. Turnover in a basket of ETFs known to be linked to such interventions picked up late on Thursday, and one ETF tracking the CSI 300 drew a record single-day inflow of 18.8 billion yuan (about US$2.8 billion).
The formal record is more measured than the guidance passed verbally. On Oct 10, CSRC Chairman Wu Qing chaired a symposium in Beijing with listed-company executives and securities and fund experts. The regulator's statement listed stronger stabilisation mechanisms, broader channels for medium- and long-term "patient" capital, higher dividends and share repurchases by eligible companies, and closer oversight of trading activity and cross-border risks. It did not announce a blanket ban on selling. The CSRC said as far back as February 2024 that exchange measures targeted abnormal trading, not normal share sales — worth remembering when reading claims of fresh selling restrictions.
The intervention followed months of weakness. The benchmark index is down about 10% this year and closed Thursday at its lowest since August 2025. The Shanghai Composite fell 0.88% to 3,767.23 on Wednesday and 1.59% to 3,707.48 on Thursday. For the week it dropped 2.56% to 3,716.28 — the biggest weekly decline since the week ending July 17 and a fourth straight down week.
Much of the pain was concentrated in technology. The CSI 300 lost roughly 12.5% in the third quarter, its worst since 2022, while the tech-focused Star Market 50 fell 31%. A global selloff in AI supply-chain shares, rising borrowing costs and doubts about the returns on AI infrastructure spending all weighed on sentiment.
Friday brought a partial recovery from 14-month lows. At least 10 AI supply-chain companies announced buyback or share-purchase plans, including optical transceiver maker Eoptolink, whose chairman proposed a buyback of up to 1 billion yuan, and chip equipment maker Piotech. Chipmakers MetaX Integrated Circuits and Hygon Information Technology published third-quarter profit forecasts signalling rapid growth. The Shanghai Composite closed up 0.24% at 3,716.28, though the market still logged its worst week in three months.
Beyond the announcements, filings show actual activity. Since early October, companies on the Shanghai Stock Exchange have disclosed more than 120 buyback-related filings. Haier Smart Home has repurchased a cumulative 110 million shares, or 1.177% of total share capital, for 2.29 billion yuan (about US$342 million) under a programme launched on March 27 that targets 3 to 6 billion yuan through March 25, 2027.
The burden is distributed. Companies are pushed to buy back shares and raise payouts; insurers are asked to hold and report positions rather than lock in losses; state funds are asked to buy faster. Much of the pressure lands on institutions with their own solvency constraints. Earlier, Beijing injected 360 billion yuan into three state banks and five state insurers through special treasury bonds, including 35 billion yuan for China Life Insurance — a reminder that buying equity for stability can drain the very capital buffers regulators want to protect. Analysts note bank shares have climbed to their highest since 2018 with insurers among the mandated buyers.
Underlying demand looks fragile. A Cheung Kong Graduate School of Business survey for the third quarter of 2026 put the share of respondents expecting A-shares to rise at 58.6%, down 5.2 percentage points from April, with expected returns at minus 0.7%. Shanghai-Shenzhen turnover fell to 1.41 trillion yuan on Sept 29, down 64% from January's peak of 3.94 trillion yuan.
What happens next depends on whether the buying persists. HSBC cut its end-2026 targets for the Shanghai Composite, CSI 300 and Shenzhen Composite by 9% to 15%, to 4,100, 4,800 and 14,500 — still implying 8% to 15% upside. Morgan Stanley warned that global liquidity headwinds and weak domestic consumption may cap further gains. Market participants are watching whether the Shanghai Composite can hold the 3,700 level. The thread running through analyst commentary: administrative guidance can put a floor under prices, but it does not change earnings or demand.