China’s “national team” reduced its stock holdings dramatically in the first half of 2016 without derailing a market rally, defying predictions that withdrawal of government support would spark a resumption of last summer’s crash.
In early July 2015, with the Shanghai and Shenzhen equity markets in freefall following a year-long run-up, Chinese regulators deployed a coalition of state-owned financial institutions known collectively as the “national team”.
The market value of the national team’s holdings declined to 7.3 per cent of tradeable market capitalisation at the end of June from 11.9 per cent at the end of 2015, according to Financial Times analysis of data from Wind Information, a research firm. In value terms, the team’s holdings fell Rmb345bn ($52bn) to Rmb2.76tn — a decline of 11.5 per cent.