Who Keeps Crashing China’s Stock Market?

China's Market Slide and the Blame Game

China is once again trying to arrest a sharp fall in its equity markets, barely two years after its last major rescue effort. The People's Bank of China is extending cheap funding for corporate buybacks and liquidity support to institutions. The state-backed "national team" of buyers appears to have become more active, and regulators have revived informal window guidance asking institutional investors and brokerages to hold off on selling.

October brought the market's steepest monthly fall in over ten years. The blue-chip CSI 300 Index slid into bear territory from its late-June high, while Shanghai's Star 50 technology index dropped by as much as 48%.

Who Is Selling

Attention has turned to insurers. Shiva Capital Group founder Hong Liang, in a client letter, said insurance firms bought technology stocks close to the July peak and then sharply reduced holdings in late September. He called the conduct hard to understand.

Some context supports the claim. Margin financing and northbound Stock Connect turnover have both eased, which weakens the case against leveraged traders and foreign money. That points instead to long-only institutional investors. State-owned insurers have raised equity exposure in recent years, partly at the urging of policymakers who want them to supply long-term capital. China Life, for example, lifted its equity allocation to 19.2% by end-June from 16.9% in 2025.

Why It Matters

Authorities have reportedly told major insurers to report holdings, avoid booking losses, and align investment choices with broader economic objectives. But insurers face claims and liabilities, so they cannot hold losing positions indefinitely. Third-quarter profits at China's five largest listed insurers fell sharply, mainly on domestic equity declines. China Pacific Insurance executives described equity investing as complicated and stressed managing volatility. For such balance sheets, steady dividend payers may suit better…