Premier Li Qiang hosted the State Council executive meeting and emphasized the importance of further strengthening the market stabilization scheme. Interestingly, the meeting discussed many other social welfare issues. The market stabilization scheme is the odd one out. It shows how important market stability is in government work as the year winds down. Previously, we postulated that, given this year’s growth target is largely within reach, government work would focus on market stability. Today, the national team continued to buy broad-based ETFs to support the market, albeit at a slower pace. It's likely because of the State Council meeting; the team is taking a breather. And many brokers took up the third round of rediscount loan to buy stocks. Many semi names were bid despite an epic selloff rolling around in Asian markets. As such, despite a 5-sigma selloff in the US overnight, the Chinese market remained mostly resilient over the day.

I was told that the IPO of YMTC (Yangtze Memory Tech Co.), one of China’s largest memory chip companies, would be suspended because of market volatility. Typically, a suspension of IPOs is considered an important sign of the market bottoming out by Chinese traders.

Democrats' sweeping win is good for Chinese stocks. That's because a Democrat-controlled Congress is likely to rein in Trump’s erratic behavior, giving China plenty of time to prepare countermeasures. And the PBOC is trying hard to help, cutting the interest on the rediscount loan for stock repurchases to 1%. Given that several blue chips are now offering 5%+ dividend yields, it's a steal, and there should be interest in using this facility. There is concern about not being able to sell when there is capital gain, as the CSRC restricts reducing large stakes in listed companies. This restriction is a legitimate concern, but the rediscount loan term can be extended. As long as dividend yield is higher than the loan costs, there should be plenty of takers. Chinese stocks are turning higher after the mid-term results.

It was said that: - brokers would fork out money to buy stock; - IPO suspended, though there would be no official announcement; - no more large stakeholders selling down stakes after the IPO, at least for the time being. These measures are necessary to cut liquidity outflows and rebuild confidence. Shockingly, the stock market IPOs have become some people’s cash ATM. It's unfair to small retail investors, who are often left holding the bag. Something must be done. As I tweet, the PBOC announced it would launch the swap program tomorrow, allowing brokers to buy stocks. It's 9.24 on the Chinese lunar calendar.

Everyone misses the “September-24 Surge” from two years ago. Interestingly, today is September 24 in the Chinese lunar calendar. A50 futures +1%. $FXI $KWEB $CQQQ $PGJ $EWH $YINN $YANG $BABA $PDD

The PBOC, CSRC, and NFRA will convene today to discuss market stabilization methods. The discussion will focus on how best to use existing liquidity tools, such as the rediscount loan for stock buybacks and the swap facility, to boost liquidity at brokers. If the discussion is limited to fine-tuning existing policies, the market is unlikely to be satisfied and will look for more signs of further market stabilization efforts. Last week, the PBOC effectively cut the policy rate by lowering the repo rate corridor by 15bps. But it's to respond to the liquidity event induced by Huafa, one of the major property developers in Zhuhai. This move will probably reduce the likelihood of a near-term rate cut, especially while the Fed is still hiking. But an RRR cut, though its effect will be largely signaling, can still be vaguely in the cards.

China’s STAR50 index plunged 45% in 120 days, while the NASDAQ plunged 45% in 360 days in the 2008 financial crisis. Calling it a meltdown is an understatement. The national team has been buying, but it's been more reactive than proactive. The team should raise the flag by announcing it will prop up the market whatever it takes, rather than trickling in every day toward market close—unless the team wants to buy at a lower price.

The Chinese market is in a dump. The 5% single-day plunge yesterday was one of the worst in the past 3 years — a 2.65-sigma event. Many are blaming the bursting semi bubble and the French, but Chinese economic data are better than expected, and yields are at historical lows. Given that this year’s growth target is within reach, policy support will be more directly market-related than traditional stimulus. Recently, large buy-ins in broad-based ETFs clearly signal the national team at work. An overlooked catalyst for the selloff is the SFC investigation into irregular IPO activity. The SFC found that many IPO subscription processes had been rigged to create a false appearance of oversubscription. It's basically a pump-and-dump scheme. By some estimates, over half of the IPOs involved some form of rigging. Such frauds undermine market confidence, harm retail investors' interests, and could trigger a sell-off due to investigations and penalties. Tax law changes around rich Chinese offshore family trusts and potential penalties also didn't help. There are many catalysts for the selloff. Every snowflake is guilty when there is an avalanche. HK valuations are now <10x, vs. the US at >19x. We warned of an accelerated late-stage selloff in this episode of our monthly podcast. The good news is that the harder the selloff, the stronger the rebound later. $FXI $KWEB $EWH $PGJ $BABA $CQQQ $YINN $YANG $ASHR

【Monthly China Market Strategy with Julius Baer】Recent market plunge has reignited debate over economic data, semi bubble, policy stimulus and the outlook for growth. In this episode, we examine what the prospects about policy stimulus, economic outlook, technological ambitions, export outlook, the impact of escalating trade friction and the bursting semi bubble. $FXI $KWEB $EWH $PGJ $BABA $CQQQ $YINN $YANG $ASHR

In the past few years, whenever Vice Premier He Lifeng met with Ray Dalio, the Shanghai Composite either bottomed out or rebounded strongly. $FXI $KWEB $CQQQ $BABA $EWH $YINN $YANG $PGJ

“The outlook is challenging for the AI trade. It is tough,” said Hao Hong, chief investment officer at hedge fund Lotus Asset Management. Market participants are worried CXMT “is going to increase capacity of the industry and create a price war,” he added. $FXI $KWEB $BABA $CQQQ $EWH $PGJ $YINN $YANG

The central government is directing local governments to draw on the unused debt quota of 550bn this year, with 300bn as general-purpose bonds and 250bn as special-purpose bonds. The fund is for stabilizing growth, investment, and safeguarding people’s livelihoods. While this money is within the 2026 budget rather than new money, the urgency to spend it is new. And most probably, we would have forgotten about this money under the mattress.

In yesterday’s “The China Show” on Bloomberg, we discussed the likelihood of a policy combo, BK liquidity being squeezed by rising US yields and a flurry of IPOs this year. The plunge tells us the market is panicking. That's always the wrong time to sell when everyone else is selling. With @DavidInglesTV @YvonneManTV $FXI $KWEB $CQQQ $PGJ $BABA $EWH $YANG $YINN

China’s Finance Minister Lan Fo'an published an article today, calling for: - accelerate lagging spending; - make coordinated use of ultra-long-term special treasury bonds and local special bonds; - expand interest-subsidy policies; - issue RMB 300 billion of special treasury bonds to recapitalize central financial institutions, - introduce measures such as using the remaining local government debt limit to support investment. Yesterday, the government announced a mortgage subsidy for first-time homebuyers. It looks like such an interest subsidy will expand to other sectors. In the first half, China has been slow to spend the fiscal budget planned this year. Sure, China’s fiscal spending tends to accelerate in the second half. It's now or never. I continue to expect more policies after the long holiday.

With the National Day long holiday just around the corner, the Shanghai Composite and the Hang Seng are trying hard to take back the lost ground at the open today. In the near term, 3800 is a dependable bottom for traders. Consensus seems to think yesterday’s stimulus was underwhelming and calls for “structural reform” to solve the problem. However, the structural problem of strong investment and weak consumption has existed for years. Using a long-term structural problem to explain and resolve short-term issues is illogical and futile. I have long held that weak consumption is an income and wealth distribution and disparity problem, as Chinese labor compensation as a percentage of output is way too low. I have consistently expressed this view in various high-level speeches and interviews in the past few years. Simply put, Chinese labor is underpaid, especially considering how productive it has been. To reform is to improve. It's good that the Chinese economy has grown dramatically, and thus can now afford to pay its labor more. The money made from exports should be used better for people, their welfare, healthcare, and development. $FXI $KWEB $CQQQ $BABA $PGJ $PDD $EWH

China offers mortgage subsidies for first-home buyers. I specifically discussed this property stimulus in this episode. A few weeks ago, I noticed a notable deceleration in growth and consumption. While exports are strong, this only suggests strong foreign demand for Chinese goods, contrasting with languishing domestic demand. I argued that policy needs to be strong and now. And here it is. I expect other policy details will come out soon.

State Council of China studied policies to support the economy and stabilize the housing market. Policies could include better use of the remaining debt issuance quota and reduced lending to the tech and agri sectors. It also mentioned public-private joint investment to spur growth and employment. In last week's monthly dialogue with Julius Baer, we discussed the likelihood of China introducing new policies to support growth. As growth weakens, the urgency for such policies grows.

【与瑞士宝盛的月度对话（英文版）】US-China relations are back in the spotlight, with investors watching whether talks between China and U.S. Presidents can deliver meaningful progress and shift market sentiment. The discussions come as Chinese markets contend with trade uncertainty, tentative policy support and a challenging domestic growth backdrop. We discuss the outlook for Chinese equities and property, and sentiment towards Chinese AI stocks. They also discuss the longer-term AI investment story and the impact of rising oil prices and interest rates on global markets. (Recorded 20260925) Moving Markets | The View Beyond: Can Trump-Xi talks shift market sentiment?