Remember how, a couple of days ago, we noted how amusing it would be if China was forced to deploy the infamous “national team” to ensure stocks didn’t close red on MSCI inclusion day?
Specifically, here’s what we said on Wednesday morning:
In China, stocks kinda shrugged at the MSCI inclusion announcement. Or at least at first, as the SHCOMP was only modestly higher. It did rally into the close (wouldn’t it be funny if the national team ended up buying stocks just to ensure the benchmark didn’t end in the red on MSCI day?).
Well, fast forward a couple of days and some folks are saying the same thing. Indeed, it looks like the good folks on the national team might have stepped in again today.
Have a look at this:
See those green arrows? Yeah, that’s probably the authorities buying in the afternoon to ensure a decent close. Here’s Bloomberg:
Chinese stocks swung higher in late afternoon trading amid speculation that state-backed funds stepped in to steady the market.
The Shanghai Composite Index reversed losses of as much as 0.9 percent to end 0.3 percent in the black. The CSI 300 Index followed a similar path, erasing the day’s drop to finish 0.9 percent higher and cap its best week since November.
Chinese equities had dropped Thursday amid reports that the China Banking Regulatory Commission has asked some lenders to identify their exposure to companies including billionaire Wang Jianlin’s Dalian Wanda Group Co. and Guo Guangchang’s Fosun International Ltd. That came less than 36 hours after the MSCI announcement, which spurred mainland shares to their highest closing levels since December 2015. Chinese shares have been weighed down this year by an official campaign against excessive borrowing, with the Shanghai Composite declining in the last three months.
“The market has been like this for a while — bouncing back toward the end of the day,” said Steven Leung, executive director at UOB Kay Hian (Hong Kong) Ltd. “There’s still belief that authorities are trying to maintain the stock market at a certain level and don’t want to see a very low close.”
So that’s a fun wrinkle in the MSCI inclusion story.