China spent RMB 830 billion this month to protect the market from falling. Analysts: Weak domestic demand may be a waste of money

China has invested a lot of money to protect the market this month. (AFP)

[Compiled by Wei Guojin/Taipei Report] The South China Morning Post reported that China's stock market is in the doldrums, and the signs of the "national team" entering the market to support the market are becoming more and more obvious. According to Goldman Sachs statistics, the Chinese national team may invest 170 billion yuan (NT$826.833 billion) this month to buy ETFs tracking key stock indexes. The CSI 300, which fell into a bear market, stopped falling and rose 0.85% on Wednesday (28th). However, some international investment bank analysts pointed out that this is still not enough to drive a lasting rise in the Chinese stock market, because the real recovery of the market depends on economic fundamentals.

Macquarie and Swiss private bank Julius Baer pointed out that the stock market may be temporarily stable after the intervention of China's Central Huijin and other state-owned funds, but whether it can continue to rise depends on the strength of corporate profits and domestic demand, and the latter is the weakness of the Chinese economy.

China has intensified its intervention in onshore and offshore markets since the CSI 300 fell into a bear market and the Sci-Tech 50, which stocks semiconductor stocks, fell more than 40% from its record high. Goldman Sachs estimates that the national team may buy 170 billion yuan in ETFs in October, while Bank of America estimates that it will invest more than 110 billion yuan (NT$534.366 billion).

Larry Hu, head of China economic research at Macquarie, pointed out that "the national team's focus is to stabilize the stock market and help prevent systemic risks. However, continued market gains still depend on the recovery of domestic demand, which will occur when Beijing no longer relies on export-driven growth."

Société Générale said that until June this year, the Chinese market was filled with excitement. During this period, the Chinese national team sold 1.5 trillion yuan (NT$7.3 trillion) of stocks to control the rise. After the market sentiment deteriorated in July, it turned to overbuying.

China's stock market remains volatile as investor sentiment swings between expecting the country to step up its support efforts and worrying about economic growth prospects and withdrawing from AI investments.

The surge in trading volume of the largest ETF linked to the CSI 300 and Science and Technology 50 shows that government investors are conducting long operations. However, unlike the interventions in 2015 and 2024, this time the buying is more focused on technology stocks. ETFs tracking the Science and Technology Innovation 50 Index and the Shenzhen ChiNext Index have attracted about 50 billion yuan (NT$243 billion) in new capital inflows this month, according to Bank of America data.