China's National Team Reduces Stake in ETF Below 20% Disclosure Threshold

China's National Team Exits Dominant Role in Stock ETFs

China's "national team" has significantly reduced its role in the country's biggest stock exchange-traded funds (ETFs), a move that indicates efforts to curb an overheated rally earlier this year. Central Huijin Investment Ltd, a unit of China's sovereign wealth fund that leads a group of state-backed investors used to stabilize markets, has cut its ownership in several key ETFs to below the 20% disclosure threshold, according to first-quarter filings.

The disclosures provide the clearest confirmation yet that the national team, widely believed to have sold aggressively in January as turnover surged to a record, exited a substantial portion of its ETF holdings amid an increasingly speculative rally, particularly in parts of the technology sector. This move is a break from past rescue playbooks, indicating that Beijing is willing to actively drain speculative excess.

Central Huijin and its asset management arm may have reduced their holdings by at least half in flagship products such as the 200 billion yuan Huatai-PineBridge CSI 300 ETF. As of the end of last year, the two entities held 42.6% and 40% respectively. Even smaller funds such as the HuaAn SSE 180 ETF, previously 92% owned by the national team, reported no single shareholder above the 20% threshold, indicating the stakes were cut across the board.

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Quarterly ETF filings only require disclosure of investors with holdings of 20% or more. Central Huijin had consistently met this threshold until now. While ownership levels can fluctuate as others trade, the sharp decline in total ETF units outstanding during the period suggests that the market's dominant buyer until recently played a decisive role in the outflows.

Note: The exact current ownership of Central Huijin in these funds is unclear.