China’s ‘national team’ bloats CSI 300 ETFs, as buying binge propels them to top of mutual-fund bracket

Direct purchases by the national team over a six-month period were a key support measure authorities took to end a three-year stock market rout

The Huatai-PineBridge CSI 300 ETF held US$18.1 billion at the end of last year, making it the biggest in China’s mutual-fund industry

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An investor watches a board showing stock information at a brokerage office in Beijing, China. Photo: Reuters

Published: 7:00am, 5 Apr 2024

China’s state-directed buying binge has swollen the size of exchange-traded funds (ETFs) tracking the underlying benchmark CSI 300 Index, vaulting these investment products to the top of the nation’s mutual-fund rankings.

This intervention is reflected in the outperformance of the CSI 300 Index, which includes the top 300 stocks traded on the Shanghai and Shenzhen Stock Exchanges, after it rose 4 per cent this year. This beat the 3.2 per cent gain in the Shanghai Composite Index and a 3.8 per cent loss in the Shenzhen Composite Index.

State buying “is why there’s a considerable increase in the units of CSI 300 ETFs and why the CSI 300 Index has performed well relative to other major stock gauges,” said Zhao Wei, an analyst at Founder Securities.

Direct purchases over a six-month period by the national team, a term that refers to China’s state buyers, were a key support measure taken by authorities in a bid to stem a three-year rout in the nation’s stock markets. Central Huijin Investment, the investment arm of China’s US$1.24 trillion sovereign wealth fund, said in February that it would ramp up ETF buying to “resolutely” ensure stable capital market operations. In October, it declared purchases of shares in state-run lenders Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank, adding that it would continue to increase its holdings over the next six months.

A pedestrian flies a kite in front of buildings in Pudong's Lujiazui Financial District in Shanghai, China, on February 19, 2024. Photo: Bloomberg

The assets under the management of Huatai-PineBridge CSI 300 ETF totalled 131.1 billion yuan (US$18.1 billion) at the end of last year, making it the biggest in China’s 27.5 trillion yuan mutual-fund industry, according to Bloomberg data and the fund’s annual report. Three other ETFs, operated by E Fund Management, Harvest Asset Management and China Asset Management, also made their way into the top 10, the data showed. First quarter data is yet to be published.