China Daily Briefing

China's central bank bought 740,000 troy ounces (23 tonnes) of gold in September alone, the largest monthly addition in three years, bringing reserves to 77.47 million ounces as Beijing continues to reduce USD asset exposure. This is a direct de-dollarisation signal with implications for RMB internationalisation — larger PBOC gold reserves historically precede moves to expand yuan-denominated trade settlement. For Stock Connect investors, the PBOC's balance-sheet pivot toward hard assets over US Treasuries is consistent with a longer-horizon view that does not require near-term USD/RMB stability.

Southbound Stock Connect flows into Hong Kong equities were positive for the fourth consecutive month in September, with mainland Chinese investors accelerating purchases despite elevated US Treasury yields and geopolitical headwinds. The AI-theme concentration in Southbound flows — targeting Alibaba, Tencent, and Kuaishou — confirms that domestic investors see HK-listed tech as undervalued versus A-share tech equivalents on an A/H premium basis. This is the institutional Southbound bid that has been absorbing offshore selling; watch whether the flow sustains into October as the PBOC's Q4 MLF injection calendar approaches.

China's futures exchanges announced they will intensify the crackdown on program-trading malfeasance by defining specific violations, a move Beijing hopes will reduce cross-asset volatility risk in a period of fragile market sentiment. The regulatory action targets quant strategies that exploit momentum signals in futures, which have amplified both the rally and reversal in A-shares over the past 18 months. For STAR Market and CSI 300 investors, tighter quant curbs historically reduce short-term volatility but may also reduce liquidity in medium-term drawdowns — the net effect depends on whether retail-driven swings replace algorithmic ones.