China’s $1.24tn (£1tn) sovereign wealth fund bought ETFs and bank shares, while the country’s biggest stockbroker halted short selling for some clients.
Short sellers borrow shares and sell them in the market, then later buy them back and return them to their owners. If the stock price falls, they make money as a result.
Large amounts of short selling can cause prices to fall sharply, meaning that the practice is often restricted in markets that are under stress.
Beijing is also moving to impose informal restrictions on some investors to prevent them from selling shares.
Last week, Chinese Premier Li Qiang, one of President Xi Jinping’s closest allies, chaired a meeting to call on authorities to put in place more “strict” measures that would boost the investment value of listed companies.
This led to a three-day gain for the CSI 300. However, by the end of the week, stocks fell again in a sign that more stimulus was needed to help revive confidence.
The decline in stock prices comes amid questions about the strength of the Chinese economy, with investor sentiment affected by the decline in the country’s real estate market.
Late last month, Xi Jinping made a rare acknowledgment of economic weakness, saying he recognized that people were struggling to “meet basic needs” in China.
The country is also facing an ongoing slowdown in manufacturing in the wake of the pandemic.