China's authorities have shifted to manual management of the stock market: banks have been recommended to suspend new initial public offerings (IPOs) and large share sale transactions by existing shareholders. The trigger was the 8.5% collapse of the CSI 300 index — the key gauge of mainland China — in October, the worst monthly result in more than a decade.
The decision was formalized by the China Securities Regulatory Commission (CSRC) in the form of oral recommendations rather than formal directives. The regulator has not yet provided official comment. All large share sale transactions by existing shareholders are also frozen until the market situation stabilizes.
Against this backdrop, IPO volume in 2026 reached 292 billion yuan ($44 billion) — the highest since 2023. The pause jeopardizes the market's recovery and limits Chinese companies' ability to raise capital, holding back new deals.
Will Beijing Stop the Decline
On Monday, the regulator cut the rate on its refinancing program for share buybacks from 1.25% to 1%. The market's reaction on Tuesday was mixed: the CSI 300 slipped 0.2%, while the tech-focused Star 50 fell 3.8%.
Experts doubt these measures alone can reverse the trend. "It is unlikely to lead to a sustained turnaround unless accompanied by steps to address structural problems," noted Thomas Matthews, head of Asia-Pacific markets at Capital Economics.
Risks for Global AI Investments
Xiao Yuanqi, deputy head of China's National Financial Regulatory Administration, warned about the risks of excessive concentration of investment in artificial intelligence (AI). According to him, investors are channeling capital into this sector en masse.
The S&P 500 has risen 10% since the start of the year, but the selloff in technology stocks on Wall Street in late October crashed the Nasdaq-100 — roughly $2 trillion was wiped out after leading companies reported their AI spending.
Jason Lui, head of Asia-Pacific equity and derivative strategy at BNP Paribas, believes there are entry points in mainland China-listed stocks over the medium term. He clarified that these steps are unlikely to change market sentiment as sharply as they did in September 2024.
The link to Wall Street runs through participants' sentiment regarding AI. Weakness will emerge if U.S. corporate reports confirm high AI spending. According to Goldman Sachs, hedge funds sold AI company stocks for five consecutive days in October. If the selloff resumes, the decline in the Chinese market may become not an exception but a warning signal.
Cryptalist Analysis: The CSRC's actions are a classic example of administrative suppression of volatility rather than elimination of its causes: freezing liquidity in the primary market and buybacks funded by cheap financing provide only temporary relief. For the cryptocurrency market, this is a twofold signal — on the one hand, capital outflow from Asian risk assets may strengthen correlation with the global risk-off; on the other, pressure on the U.S. AI sector could redirect flows into digital assets as an alternative to overheated technology stocks.