“They Don’t Want To See A Low Close”: China Is Still Manipulating Their Stock Market

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:

China

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.

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3 thoughts on ““They Don’t Want To See A Low Close”: China Is Still Manipulating Their Stock Market

  1. How about they have learned from us. Our markets are as manipulated as ANY period. The Fed is playing the same game dishing out $$$, buying and selling crap debt on a continual basis to shore up this ongoing ponzi scheme. Central banks are the bane of the world’s markets, dropping everyone into debt they didn’t create but are saddled with under the illusion of growth. It’s just a giant “debt bomb” that will blow-up and bury all of us in a “big ole phat” depression that will go on for who knows how long.

  2. The “magic hand” is just an act and investors are ready to believe that the Statue of Liberty actually disappeared.

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