Two large Chinese investment funds with connections with the central government dumped their entire stock and bond holdings last quarter, Bloomberg reports, raising questions as to whether Beijing is shifting its strategy for dealing with market turmoil.
CM Fengqing Flexible Allocation Fund and E Fund Ruihui Flexible Fund had cut their combined assets down to just Rmb 296 million ($43 million) by the end of September, from Rmb 31.4 billion in June, according to company reports this week.
The government’s previous hands-on approach to defusing financial market risks appears to have softened this year, with more emphasis placed on unclogging financing channels rather than billion-dollar bailout packages.
This may have signaled to China’s state-backed financial institutions that Beijing is adjusting its investment strategy away from the markets despite a chaotic recent sell-off. The two firms mentioned were both set up in 2015 as a vehicle to boost sentiment after a heavy rout cost almost $5 trillion in market value.