(Bloomberg) — Chinese stock indexes rebounded in afternoon trading, with a jump in trading volume in some major exchange-traded funds sparking speculation that buying by state funds may be behind the reversal.
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The trading value of the Huatai-Pinebridge CSI 300 ETF rose to 15.3 billion yuan ($2.1 billion) on Thursday, the highest level since 2015, while the value of the Harvest CSI 300 ETF and the E Fund CSI 300 ETF also saw extraordinary rises. This coincided with gains in the CSI 300 mainland stock index, which closed 1.4% higher after falling 1.8%.
“The national team will likely take steps to stabilize the market as it did in previous market crashes,” said Marvin Chen, a strategist at Bloomberg Intelligence.
Foreign investors were again net sellers of mainland stocks after selling 13 billion yuan ($1.8 billion) worth of shares in the previous session, the most in more than a year.
Read: Chinese stock decline shows no signs of abating as risks rise
The rare progress in Chinese metrics comes after selling extended into the new year amid doubts about the economy. The latest economic data showed the country’s real estate crisis worsening, while geopolitical tensions with the United States and the whims of Beijing’s policy continue to put investors on edge.
The Hang Seng China Enterprises Index ended the day up 0.8%, reversing a previous decline of 0.6%. The HSCEI is down 10% this year, the world’s worst-performing major index.
During previous market downturns, state funds were suspected of being behind increases in the sales volume of these ETFs when they intervened to save the market. For example, Central Huijin Investment Ltd, a sovereign wealth fund, bought an undisclosed amount of ETFs in October and pledged to continue increasing its holdings.
Read: Record trading volume in China ETFs fuels speculation on country buying
However, such gains by stock market ETFs never last more than a few days. Investors say these moves may help improve sentiment in the short term but do little to solve the fundamental problems plaguing the market.
(Updates with closing prices.)
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