China's Stock Market to Receive Massive Inflows of $138 Billion in 2025

Analysts anticipate that China's recently introduced policies will inject substantial liquidity into its struggling stock market, with estimates ranging from $138 billion to $1.38 trillion over the next three years.

Additional Investment Sources

According to a JPMorgan Chase & Co. forecast, mutual funds and insurance companies may contribute approximately $180 billion in additional purchases this year. This represents approximately 1.7% of the total market capitalization traded, with potential inflows of up to $545 billion over three years.

Regulatory Mandate

The figures stem from new directives from China's financial authorities, requiring major state-owned insurers to invest 30% of new premiums in onshore stocks annually from 2025. Mutual funds are also expected to raise their holdings by at least 10% annually for the next three years.

Market Sentiment and Policy Impact

Chinese equities have faced pressure in recent months due to economic slowdown concerns and the threat of increased tariffs under the Biden administration. Investors have closely monitored developments to gauge the effectiveness of these policies.

Estimates from Other Banks

Other banks have estimated an injection of at least $138 billion this year, based on the guidelines. Citigroup Inc. analysts predict around $85 billion in purchases from mutual funds and between $27 billion and $86 billion from insurers. UBS Group AG anticipates a $138 billion inflow from insurers and a $81 billion increase in holdings by mutual funds.

Recent Stimulus Measures

On Wednesday, China introduced a series of measures to stabilize its stock markets, including plans to increase pension fund investments in listed companies. However, traders remain skeptical about the effectiveness of these stimulus efforts.