(March 20): China’s loans to non-bank financial institutions surged in February by the most in seven years, prompting speculation that lenders provided a big boost of capital to state funds as they bought shares to help stem a multi-trillion dollar market rout.

Loans to non-bank financial institutions, including brokerages and mutual funds, grew by more than 400 billion yuan (RM263.36 billion) last month, according to the latest data from the People’s Bank of China (PBOC). That was the biggest jump since July 2015, around the last time the so-called national team of state-related bodies bought up equities to stabilise turbulent markets.

“China’s non-bank financial institutions usually don’t have so much borrowing need,” said Xing Zhaopeng, senior China strategist at Australia & New Zealand Banking Group Ltd. He attributed the increase to the national team likely borrowing from a commercial bank.

The central bank did not immediately respond to a faxed request for comment from Bloomberg News about the jump in non-bank loans.

China took various efforts earlier this year to stem a US$7 trillion (RM33 trillion) slide in mainland and Hong Kong stock markets, which became the most acute symbol of depressed confidence in the world’s second-largest economy. There is evidence that state institutions, including sovereign wealth fund Central Huijin Investment Ltd, snapped up shares to bolster market confidence.

Several exchange-traded funds in China saw a surge in turnover after the Lunar New Year holiday last month, a likely sign of that support. In recent weeks, Chinese stocks have rallied, with a number of benchmarks surging 20% from earlier lows.

Private estimates of “national team” buying are broadly in line with the PBOC data on non-bank borrowing. State funds poured more than 410 billion yuan into onshore shares this year, according to estimates by UBS Group AG late last month. Purchases in January and February reached nearly 300 billion yuan, Bloomberg Intelligence projections show.

Bloomberg News also reported in January that policymakers had earmarked at least 300 billion yuan of local funds to invest in onshore shares through China Securities Finance Corp or Central Huijin Investment Ltd.

Adding to clues of possible state buying: The PBOC’s claims on other financial corporations increased by more than 80 billion yuan in January and February, respectively, the largest jump in that item on its balance sheet since July 2015. Those claims represent the central bank’s lending to non-bank financial institutions, and may imply that it has provided funding to support the market rescue mission.

Speculation around the link between the PBOC balance sheet data and the market stabilisation efforts “make sense to me,” said Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered plc.

Non-bank financial borrowing in July 2015 surged by nearly 900 billion yuan, a record in data going back to the beginning of the year which still stands. That coincided with the government’s attempts to stop the market’s violent crash that year. Goldman Sachs Group Inc estimates a total of 1.5 trillion yuan was spent buying shares between June and August at that time.