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Chinese Stocks Bought By Government-directed Traders

Chinese Stocks Bought By Government-directed Traders (article)

In the second quarter, a group that is known as the Chinese “national team” of entities related to or influenced by the government of China was formed in 2015 to help support the stock market when it was under pressure, was enlisted to perform such duties – i.e. to buy stocks to the tune of 17 billion dollars or 116 billion yuan. This was reported in CNBC and attributed to Goldman. The national team is heavily overweight banks, energy and insurance companies. It also has some holdings in staples and technology industries, according to the report.

The National Team as it is called was formed in 2015 to help support stocks during that summer`s market selloff. The Shanghai Composite fell over 40 percent that year and it has struggled ever since. The economy is heavily reliant in debt and the government is trying its best to change that. The national team bought the amount of 17 billion dollars of A shares, according to Goldman Sachs Chief Equity Strategist Kinger Lau, the report said on Friday.

The second-quarter purchases account for about 0.2 percent of market capitalization and follow sales of 71 billion yuan in the first quarter. Overall, according to this research, the national team holds about 1.5 trillion yuan worth of A shares, or about 2.9 percent of the listed market capitalization.

More on the sometimes active “national team” in the coming weeks. It seems that this group is involved with the market weakens or breaks down.

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