As the world's second-largest economy rings in the New Year with a stock market crash, investors are wondering whether Beijing will once again bring out its "National Team" to bolster jittery sentiment.
The Shanghai Composite tanked as much as 3 percent early Tuesday before paring losses, having tumbled 7 percent on Monday amid weak manufacturing surveys, a depreciating yuan, the introduction of circuit breakers and the upcoming lifting of a six-month ban on share sales by investors with holdings of 5 percent or more in a company.
The ban was implemented last year as part of Beijing's aggressive stabilization toolkit after the benchmark index lost trillions of its market value during a June-August rout. At that time, government officials also ordered state-owned brokerages and a coalition of financial institutions—dubbed the "National Team"—to buy shares, a move that came under sharp international criticism, with economists calling it "heavy-handed" and a blow to Beijing's international credibility.
But should the current turmoil persist, the National Team could make a comeback this year.
"There is a possibility that the authorities may intervene to prop up the markets via the National Team, but Beijing is arguably more concerned over growth than the stock market. Furthermore, it could look really bad if they have to throw in more measures when they are in the process of withdrawing the rescue measures," said Bernard Aw, IG market strategist.