China Asks Some Funds to Avoid Net Equity Sales as Markets Sink (BBG Sources)

MNI (London) - The latest BBG source report noted that “Chinese authorities asked some investment funds this week to avoid being net sellers of equities, as a rout in the nation’s financial markets deepened, people familiar with the matter said.”

• “Stock exchanges issued the so-called window guidance to several large mutual fund houses, telling them to refrain for a day from selling more onshore shares than they purchased.”
• This comes on the back of the well-documented worry re: the Chinese economy, while the recent intensification in headwinds for the property sector and shadow banking space also represent likely triggers for the “window guidance.”
• This isn’t a new angle from Chinese policymakers, with BBG sources reminding us that “the authorities issued similar instructions to investment firms several times last year.”
• BBG cautioned that “history shows that such guidance tends to do little to support the market.”
• Accordingly, there wasn’t much, if any, reaction to the story in the Hang Seng (the story hit after the close of mainland Chinese cash equity markets).