Some of the exchange-traded funds (ETFs) most closely associated with China’s so-called “national team” experienced record outflows on Thursday, signaling a possible intervention by state-backed investors to temper a stock market rally fueled by AI enthusiasm and corporate earnings optimism.
The Huatai-Pinebridge CSI 300 ETF recorded unprecedented outflows of 20.2 billion yuan ($2.9 billion) in a single day, marking the largest withdrawal since the fund’s inception in 2012, according to Bloomberg-compiled data. Other major ETFs, including the E Fund CSI 300 ETF and ChinaAMC CSI 300 ETF, also posted record daily outflows.
In aggregate, the national team—a coalition of state-backed institutional investors tasked with stabilizing markets—offloaded approximately $10 billion worth of ETFs on Thursday, according to estimates from Bloomberg Intelligence. Analysts suggest this surge in selling may reflect official efforts to rein in speculative activity and temper market exuberance.
“It looks like the national team is selling and making an effort to cool the market down,” said Jiang Liangqing, managing director at Zhuhai Greenbamboo Private Fund Management. “While speculation has been rampant and trading excessive in some parts of the market, selling ETFs may still help in cooling that and won’t create a conflict of interest.”
The timing of the sell-off follows a surprise regulatory move on Wednesday, when Chinese authorities tightened margin financing rules. Investors largely dismissed the policy as a targeted measure to curb speculative trades in certain technology stocks. Nevertheless, the national team’s large-scale ETF sales suggest a broader strategy aimed at moderating price surges across the equity market.
Trading activity on Friday reflected heightened investor attention, with turnover in a basket of eight national team ETFs tracked by Bloomberg surging to 40 billion yuan in the first hour alone—more than double the average full-day turnover over the past year. The benchmark CSI 300 Index briefly climbed as much as 0.9% before trimming gains later in the session, highlighting market sensitivity to national team activity.
China’s national team has historically played a key role in stabilizing equity markets during periods of excessive volatility. Its portfolio includes significant holdings in ETFs tracking the CSI 500 and CSI 1000 indexes, assets analysts say have the capacity to trigger immediate price movements when large trades are executed.
“China’s national team has begun to sell ETFs to cool down the equity sector, and more selling can be expected this year,” said Rebecca Sin, an analyst at Bloomberg Intelligence. She noted that these moves are part of a broader effort to prevent overheating in markets increasingly driven by momentum in AI and technology stocks.
Market observers point out that the national team’s actions are consistent with Beijing’s cautious approach to financial markets, balancing support for growth sectors with measures to prevent speculative bubbles. By deploying state-backed capital strategically through ETFs, authorities can influence market sentiment while avoiding direct intervention in individual stocks.
Some investors welcomed the intervention as a stabilizing force. “Speculation had become excessive, and the market needed a cooling mechanism,” said Jiang Liangqing. “The national team’s ETF sales provide a subtle yet effective way to manage risk without creating a market shock.”
As China’s stock markets continue to navigate heightened investor interest in AI-driven trades and tech sector earnings, the role of the national team is likely to remain closely watched. Analysts anticipate that state-backed ETF sales and other indirect market interventions could continue throughout 2026 as authorities balance growth ambitions with financial stability concerns.
