China moves to prop up equity market with selling curbs, buybacks

Published Fri, Oct 16, 2026 · 06:34 PM

CHINA has moved to stabilise its equity market by urging companies and state funds to buy shares while guiding some investors to curb selling, people familiar with the matter said.

Financial regulators held a meeting on Thursday (Oct 15) to discuss stabilisation measures for the stock market, the people said, asking not to be identified discussing private deliberations.

Authorities also issued window guidance to several major insurers, instructing them to report equity holdings, refrain from locking in losses on underwater positions, and align investment decisions with broader economic goals, people familiar with the matter said.

Meanwhile, regulators are calling on the so-called national team to accelerate stock purchases, the people said. 

The coordinated interventions reflect mounting concern in Beijing over market fragility and an urgent push to prevent selling pressure from cascading into a downward spiral.

Earlier this month, the securities regulator committed to bolstering market-stabilisation mechanisms, expanding channels for long-term institutional capital, encouraging higher corporate payouts and buybacks, and readying additional policy tools.

China regulators were not immediately available to comment.  

The national team has already put its money to work. Turnover in a basket of Chinese exchange-traded funds known to be linked to interventions picked up late on Thursday, with one ETF tracking the CSI 300 posting a record daily inflow of 18.8 billion yuan (US$2.8 billion).

Chinese stocks rebounded early Friday before giving up some gains. The benchmark index is down about 10 per cent this year and on Thursday closed at the lowest level since August 2025.

The decline was even more pronounced in growth-oriented shares, with the tech-heavy ChiNext Index sliding 9 per cent this week and more than 13 per cent this year. 

The sell-off has been concentrated in technology and AI-related shares, which had powered much of the market’s earlier gains. Chinese stocks have also been caught in a broader global technology rout, with South Korea’s Kospi plunging more than 7 per cent on Thursday and Japan’s Nikkei 225 falling almost 5 per cent as investors reassessed AI valuations and the outlook for interest rates.

China is facing significant economic headwinds. The economy slowed more than expected in the second quarter to the weakest in more than three years, raising pressure on policymakers to speed up public spending to ensure their annual growth goal is met.  

The country is due to release Q3 GDP data on Oct 19. Weak consumer demand, sluggish private investment and a prolonged property downturn continue to weigh on growth.

Chinese government bonds have extended their rally this year amid a persistently weak outlook for the economy, with the 10-year benchmark yield hovering near the lowest in more than a year.

The yuan has gained more than 4 per cent against the US dollar in the year to date, outperforming its Asian peers thanks to China’s resilient export sector. BLOOMBERG