Beijing To Convene Stock Market Rescue Meeting As Plunge Protection Goes Into Overdrive

About one week ago, we wrote about China's version of the Plunge Protection Team going into overdrive as Beijing moved to stabilize equities amid an imploding AI trade. Bank of America's Michael Hartnett, BNP Paribas, and Goldman Sachs all pointed to signs of renewed state-backed market support.

Fast forward to Sunday: Bloomberg cites local news outlets saying China's central bank, securities regulators, and some securities firms and funds will meet Monday to review ways to boost a relending program that finances share buybacks and stake increases.

The combination of China's PPT and Beijing's search for creative tools to boost stock prices follows the CSI 300 Index's October plunge into a bear market, which fell 8.5% and dropped for a record 12 straight weeks. Last month's decline was the steepest since early 2016.

Beijing's pain point has certaintly emerged. Hartnett's latest Flow Show, "Enter the Dragon" edition, pointed out that a $17 billion inflow into Chinese equities had just occurred, while China's state-owned investment funds intervened in the stock market, according to Nikkei Asia.

Goldman's Asia desk recently noted that "state-backed 'national team' ETF buying supported the recovery, with turnover across nine favored ETFs reaching RMB84bn ($12.6bn), after the market entered bear-market territory on Thursday."

BNP Paribas' Asia Pacific equity derivatives strategist Scarlett Liu was quoted by Nikkei as saying that elevated ETF inflows point to a "reacceleration in dip-buying by the national team."

Beijing's move to rescue the CSI 300 from a bear market comes as China's official manufacturing and non-manufacturing purchasing managers' indexes slumped back into a contraction in October.  

As we noted, "What makes this PPT round especially different is what Beijing is propping up. The AI Trade."

This past Thursday, our technicians at The Market Ear gave readers a broader understanding of why China's PPT is coming to the rescue, first asking: "Is this capitulation, or just another leg lower?"