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ZH: Futures Soar After China’s Plunge Protection Team Props Up Markets

Sometime trading really is this easy. Literally minutes after we predicted last night that it was just a matter of time before central banks step in to halt the rout.

Beijing did just that when shortly after China’s markets reopened on Tuesday (a little after 9pm ET), Bloomberg reported that state-backed funds – i.e., China’s Plunge Protection Team – had intervened to shore up the market in morning trading. The funds, known as China’s “national team,” had stepped in order to ensure stability during the National People’s Congress in Beijing, Bloomberg reported citing “according to people familiar with the matter” with a Hong Kong-based trader saying entities linked to mainland funds were actively buying shares through stock links with Hong Kong Tuesday morning.

And just like that, moral hazard was baaack front and center…. yet it wasn’t enough. While the news helped Chinese stocks erase losses of as much as 3.2%, declines then resumed in the afternoon and China’s CSI 300 Index closed about 2.2% lower with Kweichow Moutai the stock that’s become an indicator of sentiment in China’s mutual fund industry, falling 1.2%..

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