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Chinese financial regulators are preparing to take action to stabilize the market after a sharp decline in A-shares during October, according to mainland media reports.
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The reports said that the People’s Bank of China, the China Securities Regulatory Commission, and the National Financial Regulatory Administration will meet with major banks on Monday. The regulators are expected to discuss expanding capital market support tools, including optimizing special re-lending facilities for stock buybacks and share purchases.
The special re-lending facility is designed to help listed companies and major shareholders access low-cost funds to repurchase shares and bolster stock prices.
Widespread monthly losses
A-shares experienced a significant downturn in October, with major indices hitting new lows for the year.
The Shanghai Composite Index fell 1.44 percent to close at 3,599.00 points on the final trading day of October, dropping below the 3,600-point mark for the first time this year.
Growth and tech stocks led the slide, with the Shenzhen Component Index down 2.73 percent to 10,833.78, the ChiNext Index dropping 4.13 percent to 2,413.63, and the SSE Science and Technology Innovation Board 50 Index declining 4.66 percent to 1,421.31.
Widespread sell-off spills into Hong Kong
Declines were widespread across sectors, led by heavy sell-offs in tech and media shares. More than 4,600 stocks across the entire market recorded losses. Combined turnover on the Shanghai and Shenzhen exchanges reached 1.67 trillion yuan (HK$1.97 trillion) that day, up 117.9 billion yuan from the previous session.
Analysts expect the Hong Kong market to face mounting pressure in November, tracking the mainland sell-off.
The Hang Seng Index could test the 22,800 points, weighed down by profit-taking in artificial intelligence stocks, policy uncertainty ahead of the US mid-term elections, weaker-than-expected mainland purchasing managers’ index data, and continued capital outflows via Southbound Stock Connect
For October as a whole, the Shanghai Composite Index lost 6.3 percent, the Shenzhen Component Index dropped 15.9 percent, and tech-heavy indices including the ChiNext and the STAR Market both suffered monthly losses exceeding 23 percent.
