China’s “National Team” of state-backed investors is poised to cut its domestic
equity ETF holdings by about 90% in the first half of 2026, according to
calculation. Led by Central Huijin Investment Ltd., the group has already
offloaded around $170 billion worth of these ETFs this year, which includes $30
billion sold since the beginning of April. This continued selling activity is
aimed at tempering perceived market froth, and while it has placed downward
pressure on the benchmark CSI 300 Index, the sales have successfully reduced the
group's stakes in multiple ETFs below the 20% disclosure threshold. Analysts
note this reduction minimizes future selling pressure and keeps their actions
hidden from upcoming 1H filings. Despite the massive ETF redemptions, broader
market liquidity and resilience remain strong, buoyed by an influx of retail
investor account openings, increased non-bank institutional deposits, and net
buying from overseas investors.
