China weighs stock market rescue package backed by $278 billion - Bloomberg News

(Reuters) - Chinese authorities are considering measures to stabilise a slumping stock market, Bloomberg News reported on Tuesday citing people familiar with the matter, drawing a sceptical response from underwhelmed investors.

Policymakers are seeking to mobilise about 2 trillion yuan ($278.53 billion), mainly from offshore accounts of state-owned enterprises, as part of a stabilisation fund to buy shares onshore through the Hong Kong exchange link, Bloomberg News reported.

The China Securities Regulatory Commission did not respond to a Reuters request for a comment.

Chinese stocks rose immediately after the report but reversed course later to slip lower and were last broadly flat. The bluechip CSI300 Index was rooted near a five-year low, while the Shanghai Composite Index remained below the psychologically key 2,800-point mark. [.SS] [.HK]

China's stock markets have had a wretched start to the year, with patchy economic growth and a renewed slump in home sales last week solidifying foreign investors' resolve to steer clear.

The report came after the cabinet, following a meeting chaired by Premier Li Qiang, on Monday said it would step up mid- and long-term fund injection in the capital market to strengthen stability and promote healthy development.

"China's stock market package is a welcome measure and shows increasing responsiveness from the authorities. But at under 2% of its GDP, we fear this is still inadequate," said Aninda Mitra, head of Asia macro and investment strategy at BNY Mellon Investment Management.

Global money managers - who have been sellers of Chinese stocks as the post-pandemic recovery sputtered - said it will take a long time or major stimulus to repair the property sector, which at one time accounted for a quarter of the economy, and change their minds.

Overseas funds have sold roughly $1.6 billion in Chinese equities so far this year, driven mainly by European active funds and Hong Kong passive money, Morgan Stanley said in a report last week.

Chinese investors are also shunning stocks.

Bloomberg in its report said Chinese officials have allotted at least 300 billion yuan of local funds to invest in onshore shares through China Securities Finance or Central Huijin Investment.

They are also considering other options, some of which they may announce as soon as this week if approved by top leadership, Bloomberg reported.

($1 = 7.1806 yuan)

(Reporting by Nilutpal Timsina in Bengaluru and Ankur Banerjee in Singapore; Editing by Muralikumar Anantharaman and Christopher Cushing)