China Urges State-Backed Funds to Increase Stock Purchases Amid Market Slump and Declining Bond Yields

Chinese regulators have unveiled a strategy to guide investment funds towards stabilizing the stock market, involving various government agencies such as the China Securities Regulatory Commission and the Ministry of Finance. Wu Qing, Chairman of the CSRC, has emphasized that state-owned mutual funds and insurers should boost stock purchases, allocating 30% of new premiums to stocks. As part of a trial initiative, a minimum of 100 billion yuan from insurers will be directed towards long-term stock investments, while mutual funds are required to increase holdings by 10% annually for three years. In response to these developments, the CSI 300 index surged by over 1.8%, spurred by the anticipation of increased capital flowing into undervalued Chinese stocks, as highlighted by Lei Meng, China Equity Strategist at UBS.