China’s new rules to add US$138b into market, analysts say
24 Jan 2025, 12:04 pm
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(Jan 24): Analysts see China’s latest initiatives injecting at least one trillion yuan (US$138 billion or RM608.44 billion) of additional flows in 2025 into its ailing stock market, with the most bullish calculation by JPMorgan Chase & Co totalling 13 trillion yuan over three years.

Additional buying by insurance and mutual funds this year should be around 1.3 trillion yuan, according to a forecast by JPMorgan. The bank said that while this is only around 1.7% of the total traded market capitalisation, flows in three years could reach between four trillion and 13 trillion yuan. JPMorgan didn’t provide a breakdown of its calculations. 

The figures are based on new rules from China’s financial authorities stipulating that major state-owned insurers need to invest 30% of their new premiums annually from 2025 into onshore stocks, while mutual funds should raise their holdings by at least 10% annually for the next three years.

Chinese equities have been under pressure in recent months, amid fears over a prolonged economic slowdown and the threat of higher tariffs by new US President Donald Trump. The MSCI China Index briefly entered a bear market this month, as investors monitored for more consistent evidence that the policies are taking effect. 

Estimates by other banks point to an injection of at least one trillion yuan this year, stemming from the guidelines. Analysts at Citigroup Inc see a total of around 620 billion yuan in buying from mutual funds and put the estimate for insurers at between 200 billion and 630 billion yuan. UBS Group AG predicts the influx of funds to reach one trillion yuan from insurers, whereas mutual funds are seen to increase holdings by 590 billion yuan.

China on Wednesday rolled out a basket of measures to stabilise its stock markets, including plans to boost the amount pension funds can invest in the nation’s listed companies. Traders have grown increasingly disappointed at Beijing’s recent stimulus efforts and have questioned the potency of the measures introduced so far.

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