Did China Get Its $234B Worth in Stock Intervention?

♠ Posted by Emmanuel in , at 12/09/2015 03:20:00 PM
OK, so the title is a bit of a trick question insofar as the intent of official actors in intervening in stock markets was not to make money but to calm investor sentiment. Still, we are in the dark somewhat over how much the Chinese government spent to prop up equities, and if this effort was money-making. BAML recently estimated that the amount poured into PRC stocks was $234 billion. What is more astounding to me though is that it bought nearly every other China-listed stock out there. Such is the reach of the PRC:
According to Bank of America Merrill Lynch, the Chinese government spent at least 1.5 trillion yuan ($234 billion) in the third-quarter alone, buying shares in at least 1,365 stocks – or 49% of the total number of listed shares – to shore up its stock markets. It has since covered most of its losses.
Merrill derived these numbers based on top-10 shareholder information disclosed by companies. It looked at holdings by China Securities Financial Corp. (the official bailout fund), domestic sovereign fund Huijin, the broker-funded Stabilization Fund, as well as the five mutual funds funded by the securities regulator CSFC. Merrill also included in its estimates the 120 billion yuan ETF bought by the CSFC – this number is based on local media reports.

Beijing seems to have recuperated most of its losses. While the government agencies have lost an estimated 224 billion yuan as of the end of September, by November 11, they collectively gathered 44 billion yuan in capital gains – or about 3% – according to strategist David Cui.
As is usually the case, you have to wonder for how long official actors will keep their money in place to ultimately make sense on whether official actors "gained" from this action over the entire investment period. Also, if they devalue the yuan again, they will likely have to intervene more to keep PRC stocks from falling like they did in August. There are so many things you have to consider when intervening that turning a "profit" doesn't really seem to be a sensible objective in the bigger scheme of things.