Chinese authorities asked some investment funds this week to avoid being net sellers of equities, as a rout in the nation’s financial markets deepened, people familiar with the matter said.

Stock exchanges issued the so-called window guidance to several large mutual fund houses, telling them to refrain for a day from selling more onshore shares than they purchased, according to the people who asked not to be identified discussing private information. The instructions were relayed to fund managers through investment executives at the firms, they added.

The China Securities Regulatory Commission, Shanghai Stock Exchange and Shenzhen Stock Exchange didn’t immediately respond to requests seeking comment.

Chinese authorities are resorting to a familiar tactic to stem a downdraft in local assets as the economic slowdown deepens and a crisis brews in the shadow banking industry. An interest-rate cut on Tuesday has done little to shore up sentiment, and speculation is growing that the government will roll out more steps to provide support.

The authorities issued similar instructions to investment firms several times last year, according to the people.

The benchmark CSI 300 Index has fallen for seven of the past eight sessions, and the 2.3% plunge on Friday was the steepest one-day drop since October. The prospect of a default by Country Garden Holdings Co, one of China’s biggest developers, is fuelling fears of a contagion.

History shows that such guidance tends to do little to support the market. After the authorities were said to have made a similar request in September, the CSI 300 gauge plunged about 10% in the following few weeks to reach the lowest in over three years.

  - Bloomberg