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The View | China’s commercial property market has its own version of a ‘national team’
In China’s stock market, the influence of the “national team” – the term for a group of state-backed institutional investors set up in 2015 to support share prices, mainly via purchases of exchange-traded funds (ETFs) – has been particularly apparent since US President Donald Trump launched his assault on the global trade order in early April.
Central Huijin Investment, a unit of China’s sovereign wealth fund that has been described as a “stabilisation” fund, ploughed 197.5 billion yuan (US$27.6 billion) into equity ETFs last quarter, according to data from Bloomberg. Funds tracking the benchmark CSI 300 index of Shanghai- and Shenzhen-listed shares accounted for more than half of Central Huijin’s purchases.
The impact of strong inflows into ETFs tracking the index is plain to see. The combined market capitalisation of the Shanghai and Shenzhen bourses is approaching a record 100 trillion yuan – 66 per cent higher than in 2015 – despite a cyclical and structural economic downturn and renewed trade tensions between the United States and China.
In China’s commercial property investment market, no funds have been called upon by Beijing to perform a national service. However, there is a strong and increasingly diverse domestic investor base that has shored up transaction activity at a time when cross-border investment has fallen dramatically.
In 2019, foreign investment in China’s commercial real estate market peaked at US$19.8 billion, accounting for more than one third of transaction volumes. Last year, foreign investors deployed just US$5.8 billion, the lowest level since 2014, according to MSCI data.
However, even after falling sharply since 2021, domestic investors deployed US$30.3 billion last year, only slightly below the level in 2019. Domestic buyers comprised 84 per cent of investment last year, the second-highest share in Asia after South Korea. Yet while cross-border investment in South Korea and other major Asian markets has begun rising again, it has fallen in mainland China and Hong Kong to its lowest level in a decade, according to MSCI.
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