China unveils stock market support after worst month in a decade
Beijing announced swaps and cheaper buyback loans after an 8.5 per cent October slide, but CNA reported shares fell again in early trade.
China's central bank and securities regulator have announced a package of measures to steady the country's stock market after the benchmark CSI300 Index fell 8.5 per cent in October. CNA and the South China Morning Post reported the announcements, made on Monday. CNA said Monday's gains had been wiped out in early trade the next day.
The largest step is a round of swap operations by the People's Bank of China (PBOC) that CNA said could inject more than 100 billion yuan (US$15 billion) into the stock market. The PBOC said 31 brokers and fund companies had already applied for swaps above that amount. The South China Morning Post described the tool as a fresh one-year facility allowing institutional investors to exchange illiquid assets for liquid ones with the central bank to buy stocks.
According to CNA, this is the third use of the facility, which was created two years ago. Operations in October 2024 and January 2025 injected a combined 105 billion yuan.
The PBOC also said a relending scheme that funds share buybacks and purchases would become a long-term mechanism instead of a temporary arrangement. Its interest rate was cut to 1 per cent from 1.25 per cent.
In a separate statement, the China Securities Regulatory Commission urged major index constituents and "dragon head" tech companies to "actively buy back shares", CNA reported. The regulator will also press some new exchange-traded funds to "speed up building stock positions" and encourage fund managers to buy shares in a down-cycle.
The outlets differed on leveraged trading. The South China Morning Post listed easier curbs among Monday's measures, while CNA said authorities were studying plans to ease margin rules. The South China Morning Post said the action followed a joint meeting of financial regulators in Beijing that day.
CNA said investor confidence has been hit by sluggish consumption, a prolonged property debt crisis and sharp falls in tech stocks. Investors are also worried about state-owned developer Zhuhai Huafa Group, after media reported it was seeking extensions on some bank loans.
The Shanghai Composite Index rose 1.1 per cent on Monday, its biggest one-day gain since August 27, before it and the CSI300 each dropped roughly 1 per cent in early trade. "These measures were below expectations," Chen Jiande, a fund manager at Fujian Tianlang Asset Management, told CNA. Hao Zhou, an analyst at Guotai Haitong Securities, said the swaps send "another strong signal" of commitment to market stability.
The PBOC said bidding under the swap facility would take place on Tuesday.
Sources: CNA, China rolls out support measures to aid struggling stocks; South China Morning Post, Beijing launches barrage of measures to stabilise stock market after sell-off.
