A record $US13 billion (£8.4 billion) went into Chinese equity funds in the last week, according to Bank of America Merrill Lynch, as China’s government scrambles to put a floor under tanking stocks.
A BAML Global Research note sent to clients Thursday shows $US25 billion (£16 billion) went into stocks globally last week, the biggest inflow since December 2014.
More than half of the worldwide total was in China, and that’s the biggest ever weekly inflow as a share of assets under management (AUM) by a long way — more than twice as large as any previous surges. Take a look:
Much of the investment is focused on A-shares, which can’t be bought or traded by foreigners, and BAML think the huge influx of cash is likely “market-support measures rather than private sector demand.”
What they’re basically saying is that a large chunk of the $US13 billion is bailout money from the government in one form or another.
China’s top brokerages agreed last weekend to buy at least $US19.3 billion (£12.43 billion) worth of shares to help sustain prices. They were backed by funding from China’s central bank, the People’s Bank of China.
Beijing has been repeatedly tried to stop stock markets falling in recent weeks with little effect. The benchmark Shanghai Composite has collapsed over 30% in the last month. The latest support effort, which include a blanket ban on selling for many, finally appeared to have worked.
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