China’s Central Huijin Investment Ltd. announced on Monday that it has increased its holdings of exchange-traded funds (ETFs) to promote stability in the capital markets. This move reflects Huijin’s confidence in the development prospects of the Chinese mainland’s stock market and its commitment to supporting market operations.
The announcement during trading hours had an immediate impact on investor sentiment. By increasing its ETF holdings, Huijin sent a clear signal to the market, easing panic and restoring confidence. This helps create a more rational trading environment and reduces the chances of large-scale sell-offs.
Huijin’s intervention also alleviates liquidity pressures by boosting trading volumes and market activity. As a major “national team” fund, its actions encourage other institutional investors to follow suit, creating a synergistic effect that strengthens the foundation for market stabilization.
Historically, Huijin has stepped in during times of market turbulence to support the markets. During the 2008 global financial crisis, Huijin purchased shares of major banks like the Industrial and Commercial Bank of China, Bank of China, and China Construction Bank. The day after the announcement, the SSE Composite Index surged by 9.46 percent.
Similarly, in 2018, amid sharp market swings due to trade tensions, Huijin and other funds bought blue-chip stocks while the central bank adjusted interest rates and reserve requirements. The SSE Composite Index rebounded significantly during this period.
While the long-term effects of such interventions can vary, Huijin’s actions consistently provide a foundation for short-term market rebounds and help stabilize declining markets.
