*

Huijin says buying China-listed shares, will defend market

stability

*

Statement helps Chinese stocks find a floor

*

Shanghai index down 7.6% since Trump tariff announcement,

Nikkei

down 13%

(Recasts and writes through)

By Samuel Shen and Tom Westbrook

SHANGHAI, April 7 (Reuters) - China intervened on Monday

to support domestic stocks plunging on U.S. tariff woes, with a

sovereign wealth fund increasing its holdings in equities and

saying it would defend market stability.

Central Huijin Investment, a unit of China Investment Corp,

said in statement it has added China-listed shares via

exchange-traded funds and will continue to increase holdings to

"safeguard the smooth operation of the capital market."

The Shanghai Composite Index lost 7% on Monday

in its worst day in five years, reeling after the U.S. imposed

extra tariffs of 34% on China last week which then fired back

with its own 34% levies. Investors dumped shares across the

board, worried about the prospect of an increasingly vicious

trade war and a global recession.

But Huijin's statement helped Chinese stocks find a floor

with the market recovering from earlier losses of as much as 9%.

They have lost 7.6% since Trump's announcement, a much milder

decline than the 13% tumble for Japan's Nikkei index.

Huijin said it is "firmly optimistic about the development

prospects of China's capital market and fully recognizes the

current investment value of A-shares."

Wen Hao, a stock trader and executive at quant service

provider Yingzhiliang Hangzhou Technology, said the market has

limited room to fall given the support of the state fund and

other likely steps such as monetary easing and measures to spur

consumer spending.

But William Xin, chairman of Spring Mountain Pu Jiang

Investment Management, said such support would not be enough to

offset the impact from a widening trade war, in which "companies

are struggling to place orders, set prices, and retain

customers."

"Hunting for bargains now is like catching a falling knife,

so I would rather hold cash until there's a bit more stability,"

he said.

Huijin is one of several state-backed "National Team"

investors tasked with stabilising the market in times of

turbulence. Others include the China Securities Finance Corp and

investment vehicles controlled by China's foreign exchange

regulator.

Huijin stepped in with stock purchases via ETFs during a

market crash in the spring of 2024. It had ETF holdings worth 1

trillion yuan ($137 billion) as of the end of last year,

according to Guosen Securities.

Harvest CSI 300 ETF, ChinaAMC CSI 300 ETF

and E Fund SSE 50 ETF - all ETFs known to be

favoured by Huijin - saw trading volumes spike to their highest

in a year on Monday.

($1 = 7.3108 Chinese yuan)