BEIJING/SHANGHAI – Chinese regulators have rolled out a handful of measures, from conducting swap operations to upgrading a lending facility for stock buybacks by listed companies, as part of efforts to stabilise struggling capital markets.
The authorities also prodded index heavyweights and leading tech firms to try to stabilise their share prices, and are studying plans to ease margin rules to increase market liquidity.
China’s central bank and securities watchdog made their announcements on Nov 2 after the benchmark CSI300 Index slumped 8.5% in October, its worst month since early 2016.
Persistent weakness in the world’s second-largest economy, reeling from sluggish consumption and a prolonged property sector debt crisis, and sharp falls in tech stocks have hit investor confidence.
Local media first reported that regulators had met financial institutions on Nov 2 to discuss tools to support capital markets. Share prices regained ground on Nov 2 in expectation of supportive policies.
As part of the measures, the People’s Bank of China (PBOC) said on Nov 2 it would conduct swap operations with financial institutions on Nov 2 that could inject more than 100 billion yuan (S$19.19 billion) into the stock market.
It will be the third time the PBOC has used the liquidity tool, created two years ago to allow brokers, insurers and fund companies to obtain liquidity for stock purchases.
The PBOC also said a re-lending scheme designed to fund share buybacks and purchases would shift from a temporary arrangement to a long-term mechanism. The interest rate of the expanded scheme was cut to 1% from 1.25%.
In a separate statement, the China Securities Regulatory Commission urged key index constituents and “dragon head” tech companies to “actively buy back shares” and stabilise market value. The regulator will also prod some newly established exchange-traded funds to “speed up building stock positions”, and encourage fund managers to buy shares in a down-cycle.
The new round of PBOC swap operations “sends another strong signal of policymakers’ commitment to safeguarding capital market stability and supporting investor confidence”, said Hao Zhou, a Hong Kong-based analyst at Guotai Haitong Securities. He said global volatility and external uncertainties continued to weigh on investor sentiment.
The PBOC said bidding under the Securities, Funds and Insurance Companies Swap Facility would take place on Nov 3.
It said 31 brokers and fund companies had already applied for swaps worth more than 100 billion yuan.
The central bank previously conducted such operations in October 2024 and January 2025, injecting a combined 105 billion yuan into the market.
The Shanghai Composite Index climbed 1.1% on Nov 2, its biggest one-day percentage gain since Aug 27. REUTERS
