China intervened to shore up its slumping stock market for at least the second time this week as state-controlled funds bought equities, according to people familiar with the matter.
Government funds purchased local stocks on Friday, bolstering the market after regulators scrapped circuit breakers that ended trading early on two days this week, said the people, who asked not to be identified because the buying wasn’t publicly disclosed. Funds purchased financial shares and others with large weightings in benchmark indexes, the people said. The CSI 300 Index rallied 2 percent at the close, after tumbling 12 percent this week through Thursday.
Chinese policy makers, who took unprecedented measures to prop up stocks during a summer crash, are stepping into the market again after a rout erased more than $1 trillion of value in the first four days of the year. While the intervention may reduce selling pressure, it clashes with authorities’ pledge to give markets more sway in the world’s second-largest economy.
Government funds also intervened on Tuesday, people with knowledge of the matter said at the time. Officials removed the market circuit breaker late Thursday after some investors blamed the mechanism for exacerbating losses.
Chinese policy makers used purchases by government-linked funds to prop up shares over the summer as the CSI 300 plunged 43 percent from its June high. State funds probably spent $236 billion on equities in the three months through August, according to Goldman Sachs Group Inc. The China Securities Regulatory Commission didn’t immediately respond to a faxed request for comment.
In the foreign-exchange market, at least two large Chinese banks were seen by traders selling dollars for yuan around the level of 6.589. The central bank ended an eight-day run of reductions to the yuan’s reference rate on Friday, helping send the currency to a 0.1 percent gain in the onshore market.
Full Coverage of the Global Market Turmoil
— With assistance by Steven Yang