As Chinese shares sit on the fringe of entering into bear market territory following a 19% pullback in the $ISHARES A50(02823)$ from its June high, China’s state-backed “National Team” has stepped in with record ETF inflows of RMB 128.7 billion (around 19 billion USD) in the ween ended 23 October (Bloomberg)
The intervention has led 2823 HK to bounce 3% off its 52-week low of HKD 14.90 on 22 October
Is this the turning point for 2823 HK and could there be further fund inflows from the National Team?
Macquarie Sales & Trading (S&T) compares this round of market stabilisation efforts compared to the previous years’
Read on for important disclaimers:
The below communication has been prepared by Sales and Trading (S&T) Personnel at Macquarie and is not a product of the Macquarie Research Department. For important disclosures relating to this communication, please see: www.macquarie.com/salesandtradingdisclaimer
Key takeaways
The National Team appears to have accelerated its equity purchases amid the sharp market drawdown since August. Last week, inflows into 20 broad market ETFs S&T tracks reached their highest level since April 2025. Fiscal policy is also shifting towards easing in 4Q following disappointing economic performance earlier this year, with new infrastructure focused mini stimulus measures to support growth.
This is in stark contrast to the start of this year, when the A share market and China’s economy were performing well. In view of this, the National Team sold aggressively in January and February, while fiscal policy shifted from easing to tightening. The fiscal tightening then weighed on the market through two channels: economic growth slowed sharply, while tighter tax enforcement weighed on investor confidence.
Both National Team and fiscal policy reflect the same “countercyclical” philosophy: smoothing out peaks and troughs. The difference is that National Team buying aims to put a floor under the market, while fiscal policy is calibrated to be just enough to meet the growth target. Neither is a bazooka designed to spark a rally or reflate the economy. A sustained market rally still depends on a recovery in domestic demand, which may come once Beijing can no longer rely on exports to drive growth.
National Team has stepped up supports
Last week, the National Team appears to have stepped up its buying amid the stock rout.To track National Team buying, S&T looks at net inflows into 20 broad-market ETFs in which Central Huijin, a major state-owned investment company, was disclosed as the largest holder at the end of last year. Last week’s net inflows were the highest since the April 2025 tariff shock. Friday also recorded the largest daily net inflow since early April last year, driving the CSI300's strong rebound that day.
The National Team's track record2023: Buying after an eight-year hiatus
In July 2023, the Politburo meeting called for “boosting investor confidence.” In October, Central Huijin announced that it had started buying ETFs again, marking its first such purchases since the 2015 stock rout.
2024: Heavy buying, followed by selling into the rally
In January 2024, the market fell sharply, with valuations reaching their lowest level since October 2022 (Fig 3). The National Team responded by significantly stepping up its purchases. It launched another round of heavy buying in July amid market weakness, then reduced its positions in October as the market rallied strongly.
2025: Stabilising the market amid the tariff shock
In April, the National Team stepped in again after the “Liberation Day” tariffs triggered a market sell-off. At that time, the PBoC explicitly backed these interventions, pledging to provide relending support to Central Huijin if needed.
2026: Selling high, buying low
The National Team sold aggressively at the start of the year. The A-share market remained strong through June, with the CSI 300 rising 27% between June 2025 and June 2026. However, the market has corrected sharply since mid-year. The National Team has consequently reversed course and gradually rebuilt its positions, with purchases accelerating sharply last week.
The PBoC as the funding source
The proxy above uses net inflows into 20 broad-market ETFs to track National Team purchases. However, the inflows to these ETFs may also reflect purchases by other investors, while Central Huijin may buy ETFs outside our sample.
Another proxy for National Team activity is the PBoC’s claims on other financial corporations, which can indicate funding provided by the central bank to the National Team (Fig 4). However, these data are published monthly, and the October figures are not yet available.
The National Team’s focus is to stabilize the stock market and help prevent systemic risk. Accordingly, it tends to reduce its holdings when the A-share market is strong and add to them when the market falls sharply.
In this respect, its actions are similar to China's fiscal spending: when growth is strong, fiscal support is scaled back; when growth slows, support increases.
Fiscal spending so far in 2026
Beijing tends to do just enough to meet the official GDP growth target. In reality, policymakers calibrate fiscal spending to meet the target, neither missing nor over-achieving it (The Policy Rule Behind China’s Two-Speed Economy, 4 Aug 2026). As a result, GDP growth and broad fiscal spending tend to move in tandem (Fig 5). With the growth target set at 4.5–5%, fiscal policy has shifted direction several times this year.
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Easing in 1Q: Economic growth slowed quarter by quarter throughout last year, so policymakers stepped up fiscal support at the start of this year, with broad fiscal spending up 3% yoy in 1Q.
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Tightening in 2Q: The April Politburo meeting described the 5.0% growth in 1Q as “better than expected.” Fiscal policy consequently shifted from easing to tightening, with broad fiscal spending falling 8% yoy in 2Q. GDP growth also slowed sharply to 4.3%.
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Less tightening in 3Q: The slowdown to 4.3% in 2Q prompted the July Politburo meeting to highlight “difficulties and challenges.” Fiscal policy became less restrictive: broad fiscal spending fell 5% yoy in 3Q, and GDP growth rebounded modestly to 4.5% (Fig 5).
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Easing again in 4Q: Policymakers have recently announced additional fiscal measures, focusing on the “six networks”, a mix of traditional and new infrastructure, including power grids, water networks and computing-power networks. Funding is provided by an RMB800 billion policy-based financial instrument and an additional RMB550bn local government bond quota.
Renewed fiscal support could lift GDP growth further to 4.7% yoy in 4Q26, implying full-year growth of 4.6%. Once again, policymakers appear to be doing just enough to meet the growth target.
Falling fiscal spending is by choice, not due to a lack of resources
Despite the falling land sales, broad fiscal revenue held up, rising 2% yoy in both 2Q and 3Q, driven by higher tax receipts. Both higher inflation and stronger tax enforcement contributed to the increase (Fig 6). For example, VAT revenue rose 6% yoy in 3Q amid higher inflation, while personal income tax revenue increased 16%, partly reflecting tighter enforcement.Fiscal tightening has weighed on the stock market in two ways. First, it contributed to weaker economic activity in 2-3Q. Second, tighter tax enforcement has affected investor confidence.
Things are changing at the margin, with fiscal policy becoming more supportive and the National Team stepping in again. However, neither represents a “bazooka”: fiscal support is intended to secure the growth target, not reflate the economy, while the National Team’s purchases aim to put a floor under the market rather than spark a rally. A sustained market rally still depends on a recovery in domestic demand, which may come once Beijing can no longer rely on exports to drive growth.
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