Chinese Market Regulators Take Measures to Reverse Stock Downturn

Chinese market regulators have implemented measures to address a recent decline in the Shanghai and Shenzhen stock exchanges, as reported by the Financial Times. In an effort to reverse the downturn, certain institutional investors have received private instructions, known as 'window guidance', urging them to refrain from selling more equities than they purchase on specific days.

The decline in China's benchmark CSI 300 XX:000300 stock index began in the first week of 2024 and has resulted in a 4% drop in the value of the country's top 300 stocks this year and a 20% decrease over the past 52 weeks.

Previously, under pressure from Beijing, the China Securities Regulatory Committee (CSRC) and the Shanghai and Shenzhen stock exchanges introduced similar selling limits in October. These measures contributed to a 3% increase in the value of the CSI 300 index. However, at the beginning of 2024, these restrictions were relaxed for some smaller funds, resulting in a sell-off that contributed to the decline in the value of the CSI 300 this year.

Meanwhile, investors await the publication of China's annual economic data on Wednesday. It is anticipated that the National Bureau of Statistics of China will reveal a 5.2% growth in Chinese gross domestic product for 2023. This aligns with the Chinese government's target for 5% annual growth, according to a Reuters poll of 58 economists.

Nevertheless, China's economic growth is expected to slow to rates of 4.6% in 2024 and 4.5% in 2025, placing increased pressure on the government to implement new stimulus measures aimed at boosting the country's economy, as indicated by Reuters' polls.