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The People's Bank of China has intervened in the bond market through consecutive days of large-scale overnight reverse repos and the establishment of tools such as the Securities, Funds and Insurance Companies Swap Facility, stabilizing the run on the wealth management market.
The Wall Street Journal reports that the Chinese stock market has entered a bear market, with Morgan Stanley warning of a potential further decline of 10% to 15% before hitting bottom, noting that state-backed fund purchases may only provide short-term support.
Intel's stock plummeted by 28.58%, the Philadelphia Semiconductor Index dropped by 7.22%, spot gold fell 3.62% to a one-year low, and Nasdaq along with Bitcoin suffered heavy drops.
On October 30, spot gold prices plummeted, while both the 10-year TIPS real yield and the US Dollar Index recorded declines. The divergence between macro factors and gold price trends reflects a sell-off triggered by a drying up of underlying liquidity in the money market.
Against the backdrop of tight liquidity at the end of the month and the Huafa default, bond funds held by bank wealth management subsidiaries faced preventive redemptions, triggering a market-wide stampede. Many investors saw two days of losses wipe out half a month's gains in their wealth management products.
October 30 was the last trading day of October. The Shanghai Composite Index fell 1.44%, the Shenzhen Component Index fell 2.73%, the ChiNext Index fell 4.13%, and the STAR 50 Index fell 5.48%. Over 4,600 stocks across the market declined. For the month, the ChiNext Index fell by a cumulative 23.02%, and the STAR 50 Index fell by 24.13%.
Insiders confirm that two matured trust products of Zhuhai Huafa Group were not redeemed on schedule, causing a sharp drop in the price of its offshore dim sum bonds.
The balance of the overnight reverse repo facility held at the Federal Reserve by money market funds has fallen to $176 million, with the buffer completely exhausted.
The 99th percentile SOFR transaction rate rose to 4.04%, exceeding the Federal Reserve's 4% window rate, and overnight repo volume rose to $3.147 trillion.
The Secured Overnight Financing Rate (SOFR) fell to 3.9%, matching the Interest on Reserve Balances (IORB) rate, followed by a series of rate inversions.
On October 22, the CSI 300 index closed down 1.84%, falling about 20% from its June high and entering a technical bear market; according to Bloomberg, the STAR 50 and ChiNext indices have both fallen about 40% in the second half of the year, and analysts believe the national team may need to buy more and for longer.
According to a report by Yicai on October 22, from January to September 2026, nationwide urban and rural residents' household electricity consumption was 123.46 billion kilowatt-hours, down 0.3% year-on-year — the first decline for the same period in nearly ten years.
According to a Sound of Hope report, Tang Ning, a figure in China's financial circle and founder of CreditEase, has been arrested. CreditEase made a late-night announcement declaring insolvency, causing 30 billion yuan in funds to evaporate and leaving 100,000 middle-class families with total losses.
On October 12, Beijing's Chaoyang police announced that a company related to Yixin had been placed under criminal investigation, that actual controller Tang and Zhao and others had been subjected to criminal coercive measures, and that investors were asked to report to the police and register; the specific charges, the amount involved, and the number of people have not yet been disclosed.
On October 11, CreditEase sent an apology letter to investors in fixed-income-like products, acknowledging that the products were in substantive default. It stated that redemptions had been completely suspended since May 22, that preliminary financial due diligence found the company may be insolvent with a large debt repayment gap, and that market-based disposal efforts had yielded no results.