Chinese stocks bounce back from bear market on suspected state support

The CSI 300 Index, a key benchmark for Chinese equities, saw a 1.7 percent increase by Friday's close, recovering from an earlier decline of up to 2 percent. This rebound occurred as the index moved out of a bear market territory. The market activity was notably influenced by a significant increase in trading volumes for several exchange-traded funds that track the CSI 300.

For example, the CSI 300 ETF managed by E Fund Management recorded 19.5 billion yuan (US$2.9 billion) in turnover, marking its busiest trading day since October 9, 2024. This surge in ETF activity is interpreted by the reporting as suggesting that Central Huijin Investment and other state-backed funds may have intervened in the market. Such intervention would aim to stem further losses and potentially restore investor confidence.

In addition to these market dynamics, major companies central to the artificial intelligence trade also reportedly sought to reassure investors. This indicates how broader market sentiment and potential state support can influence perceptions and stability across various sectors, including the technology and AI industries in China.