The large inflows into two Chinese exchange-traded funds backed by a Chinese state company have raised questions about the presence of major forces behind the stock recovery this week.
The Huatai-Pinebridge CSI 300 ETF is an exchange-traded fund that tracks the main Chinese stock market index. The inflows into the fund hit a record inflow of 6.05 billion yuan ($946 million).
That is the largest number since July 2015, according to Bloomberg data, while the other fund, China CSI 500 ETF, has inflows of 280 million yuan, the largest in more than a week.
Chinese exchange-traded funds
Central Huijin Investment Ltd. is the largest owner of the two funds. The two Chinese exchange-traded funds are among the five largest exchange-traded funds focused on equities in China.
According to data available until the end of December, with a stake of at least 28%, according to the company’s financial statements.
Central Huijin is the investment arm of the Chinese sovereign fund, and one of its units is Central Huijin Asset Management.
It was set up specifically to buy shares during the downturn in 2015, and was part of what investors called a “national team”.
Central Huijn was not immediately available for comment by phone or email.
Unknown factor returns to the markets
These operations led Kaiyuan Securities Co. analysts to expect that the unknown buyers who were part of a stock rally last summer have come back to the market.
“The return of mysterious forces means that this could be a repetition of July 2020,” with “big net purchases” of ETFs that are largely held by Central Huijin and short term overseas investors driving northbound inflows, analysts including Mou Yiling said.
The main China CSI 300 Index jumped 3.2% last Tuesday which is the largest since July. At the same time, investors are buying stocks in abundance as policymakers try to contain the rise in commodity prices.
The yuan’s value also rose, with net purchases by foreign investors reaching 21.7 billion yuan of Class A shares through Hong Kong, the highest number ever, and the stock index advancing 0.2%.
