China-Controlled Entities Stepped In to Stabilize Markets Amid Escalating Trade Tensions

Li Chen
08 Apr, 2025
Hong Kong

China and Hong Kong market indexes rebounded and halted a three-day slide after Beijing-controlled entities stepped up purchases of stocks to stabilize markets.  

The Hang Seng index rebounded more than 1%, and the mainland-focused CSI 300 index advanced 1% as tensions between China and the U.S. rose. 

The Trump administration's 34% tariffs on Chinese goods are set to be effective from Wednesday, and they will be added to the base tariff of 10% levied on all U.S. imports. 

China's commerce ministry announced its 34% retaliatory tariff on U.S. goods effective April 10, sparking a vow from Donald J. Trump to impose an additional 50% tariff on Chinese goods. 

For now, investors overlooked the escalating U.S. tariff war, and state-sponsored entities continued to buy exchange-traded funds to stabilize markets.  

The Hang Seng index plunged 13% in Monday's trading, its worst decline since the Asian financial crisis and the index's fall of 13.7% on October 23, 1997.

However, the decline was slightly less than the 12.7% fall on October 27, 2008, when the U.S. subprime crisis dragged down world markets.

The Hang Seng index suffered its worst one-day drop of 33.3% on October 26, 1987, following sharp losses on Wall Street on October 19, 1987. 

China's state-controlled entities, linked with its sovereign fund, confirmed their activities in slowing down market decline in Monday's trading. 

Central Huijin Investment, China Chengtong Financial Holdings, and Beijing Chengyang Investment confirmed buying exchange traded funds to stabilize markets and shore up investor confidence.   

 

China Indexes and Stocks 

The Hang Seng index increased 1.3% to 20,140.78, and the mainland-focused CSI 300 index advanced 1% to 3,623.93. 

Technology, online game companies, and e-commerce platform operators rebounded in Tuesday's trading. 

Alibaba Group Holding jumped 0.4% to HK $101.70, JD.com Inc. gained 7% to HK $135.30, and Tencent Holdings advanced 0.9% to HK $439.0.

Li Auto Inc. added 0.8% to HK $80.75, BYD jumped 3.2% to HK $326.40, and Xpeng advanced 2.2% to HK $66.40.

China Nerin Engineering soared more than 210% to 65.03 yuan on the first day of trading on the Shanghai Stock Exchange. 

The non-ferrous industry services provider sold 30 million shares at an offer price of 15.50 yuan per share. 

As of the first week of April, 27 new stocks are listed as A-shares on the mainland exchanges in 2025, with an average first-day gain of over 238%.