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China Boosts Market Defense With National Team Buying, Buybacks

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In short

The stabilization efforts combine direct equity purchases by the "national team" with lowered corporate borrowing costs to incentivize balance-sheet support. The central bank made its relending facility permanent and reduced the interest rate to 1% to finance these buybacks. Consequently, commercial banks have already sought over 200 billion yuan to back company repurchase proposals across the mainland.

Key points

  • Direct intervention by state entities generated the second-largest daily ETF inflow on re…: Direct intervention by state entities generated the second-largest daily ETF inflow on record to halt steep market declines.
  • Lower central bank borrowing costs are driving mainland corporations to commit billions o…: Lower central bank borrowing costs are driving mainland corporations to commit billions of yuan toward share repurchases.
  • Tech equities showed immediate signs of stabilizing after the introduction of coordinated…: Tech equities showed immediate signs of stabilizing after the introduction of coordinated liquidity measures and aggressive fund purchases.

Sources checked by our analysis pipeline: 1

China escalated its defense of the stock market, as state-backed funds answered the government’s rallying call by increasing purchases and more companies stepped up buyback plans.

A basket of nine exchange-traded funds that are favored by the so-called national team of investors drew 76.7 billion yuan of inflows on Tuesday, according to Bloomberg-compiled data. That was the second largest on record and most since April 8, 2025, when markets were then hammered by President Donald Trump’s tariff announcement.

The funds have been accelerating purchases since last month, but the spike in buying followed the government’s rollout of liquidity-injection measures this week aimed at reinvigorating the market. China’s tech-heavy Star 50 Index stabilized on Wednesday after tumbling nearly 4% in the previous session. The CSI 300 Index slipped 0.3%.

“The latest developments in the market point to Beijing’s growing recognition that more support is needed,” said Homin Lee, senior macro strategist at Lombard Odier in Singapore. “At the same time, the authorities seem to focus more on technical tweaks,” suggesting perception that the status quo is roughly manageable, he added.

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