China's "national team" owns at least 6 per cent of the mainland stock market as a result of the massive state-sponsored rescue effort this year to prop up share prices following the summer equity market crash.
One member of the team, China Securities Finance Corp, the main conduit for the injection of government funds, owned 742 different stocks at the end of September, up from only two at the end of June.
CSF was one of a number of government rescue funds that were corralled into buying shares when stock markets went into meltdown over the summer. The intervention succeeded in shoring up prices, with the Shanghai Composite index now up 28 per cent from its low point in late August.
The two state financial institutions that led the bailout increased their ownership of the Shanghai and Shenzhen exchanges from 4.6 per cent of total tradeable A-share market capitalisation at the end of June to 5.6 per cent three months later, according to Wind, a financial database.
The figures are compiled from quarterly financial statements of listed companies, which are required to disclose their 10 largest shareholders. The actual size of national team holdings is probably larger, given that some likely hold stakes that are too small to rank among the top 10.
The government cash infusion came after the Shanghai Composite index fell more than 40 per cent from its seven-year high on June 12 till late August.
The estimate of the shareholdings of the national team covers positions held by CSF, which is the state-owned margin lender, and by Central Huijin Investment, the holding company for shares in state-owned financial institutions and a subsidiary of China's sovereign wealth fund.
The market value of CSF's holdings increased from only Rmb692m ($108m) at the end of June to Rmb616bn three months later. However, the market value of Huijin's holdings fell by Rmb167bn in the third quarter to Rmb2tn, mostly reflecting mark-to-market losses on shares it previously held. This fall came despite Huijin's additional share purchases in the period.
The figures from Wind exclude share purchases by a group of 21 mostly state-owned securities brokerages who in early July pledged to inject at least Rmb120bn of their own funds to support the market. In late August, Bloomberg reported that the securities regulator asked them to add an additional Rmb100bn to their holdings.
Goldman Sachs estimated in September that the government had spent Rmb1.5tn ($234bn) to support the market in July and August, a figure that includes the brokerage purchases.
In late August the securities regulator said that CSF and Huijin would halt large-scale purchases but maintain their existing holdings indefinitely.
The significant role of the national team in propping up the market has raised concerns about the sustainability of the recent share rally, and about what would happen if the government unwound its holdings. In late July, after a modest recovery, price drops resumed when Caijing, a financial news website, reported that the national team was working on exit plans.
The Caijing journalist who authored that report was later arrested and appeared on state television to apologise for stoking "panic and disorder".
The securities regulator this week rescinded a ban on stock sales by brokers' proprietary trading units, according to leaked documents published by local media. The brokerage industry association said the group of 21 would not sell their holdings until the Shanghai Composite reached 4,500. It closed at 3,648 on Wednesday.
Fundamentals also indicate that the recent rally may not be justified. Earnings at Chinese A-share companies fell 16 per cent annually in the third quarter, including a 37 per cent drop for non-financial companies, the worst quarter since 2010, according to Credit Suisse.