Anticipation Grows as Xi Jinping’s Attention Shifts to China’s Market Woes

According to a recent report by Bloomberg, regulators led by the China Securities Regulatory Commission (CSRC) are scheduled to meet with the country’s paramount leader, Xi Jinping. This unprecedented move aims to apprise the top echelons of China’s leadership about the prevailing market conditions, as per Bloomberg’s sources familiar with the matter.

The prospect of Xi’s direct involvement, a departure from the norm, has ignited optimism for a robust intervention plan following the staggering loss of nearly $7 trillion in value from the peaks of China and Hong Kong’s stock markets in 2021.

In response to this news, key indices in both regions experienced a notable uptick. Hong Kong’s Hang Seng Index surged by 3.5% on Tuesday, while the CSI 300, representing blue-chip stocks in China, closed over 3% higher.

Despite these gains, the Hang Seng Index relinquished some ground on Wednesday, trading 0.3% lower after briefly climbing by 1.7%. Conversely, the CSI 300 remained 1% higher.

Although both indices are still in negative territory year-to-date, economists at Dutch bank ING noted on Wednesday that the CSRC’s scheduled meeting with Xi has fueled expectations of an impending rescue initiative from Beijing to bolster the struggling markets.

While recent efforts by Chinese authorities, such as state-backed interventions and restrictions on short-selling, have been made to stabilize the markets, analysts perceive Xi’s direct involvement as potentially more impactful, albeit the outcome of the meeting remains uncertain, as reported by Bloomberg.

Li Weiqing, a fund manager at JH Investment Management in Singapore, expressed optimism, stating, “The news that the nation’s number one is holding a meeting is an encouraging development as it shows that the plunge is getting close to punching through the authorities’ comfort level.”

He added, “It gives me the impression that they are doing everything they can, apart from calling out to the market — now is the time to buy,” underscoring the significance of decisive action amid market turmoil.