Li Bei, the founder of Banxia, one of China’s largest macro hedge fund firms, has called on the government in Beijing to set up a stabilisation fund to buy up domestic stocks in a bid to prop up the country’s ailing stock markets, according to a report by Bloomberg.
With falling prices hurting investor confidence, which in turn is fuelling further declines, the report cites Li as writing in a WeChat article on Tuesday that establishing a support fund was now the ‘only way’ to go.
Li wrote that despite signs the the economy is stabilising and an improvement in relations with the US, foreign investors are still selling stocks, which may indicate that some big institution have decided to gradually liquidate local holdings.
“The only way is for a stabilisation fund to enter the market,” Li wrote in an post that was subsequently deleted, a move that added would not only end the rout, but make a profit for the government.
The Chinese authorities have refrained from direct stock market intervention since the market crash of 2015.
