China's Sovereign Fund Takes Bold Steps to Stabilize Market Amid Trade Tensions

China's sovereign wealth fund, Central Huijin Investment, announced plans to increase investments in local stocks to aid market stability amid fears of a trade war-induced recession. The move follows a significant drop in the Shanghai Composite Index triggered by escalating U.S.-China tariff tensions.

China's Central Huijin Investment, a key sovereign fund, announced plans on Monday to bolster its holdings in Chinese stocks. This strategic move aims to stabilize the market, which has recently experienced turbulence due to escalating trade tensions.

Huijin's announcement follows a substantial decline in local stocks driven by worries that the ongoing U.S.-China trade conflict could trigger a deep economic recession. The fund remains highly confident about China's capital market potential and has been actively acquiring China-listed shares through exchange-traded funds.

Monday saw the Shanghai Composite Index plummet by 7%, its worst single-day loss in five years, amidst a broad sell-off. The downturn corresponded with heightened trade tensions as the U.S. imposed additional tariffs on China, prompting reciprocal measures from Beijing. President Trump's unwavering stance on imposing tariffs raises concerns of further inflation, supply chain disruptions, and a global economic slowdown.

(With inputs from agencies.)