SHANGHAI (Reuters) – China’s central bank started a swap program on Monday, exchanging 50 billion yuan ($7 billion) with financial firms to boost the stock market.
The People’s Bank of China (PBOC) involved 20 institutions with a fee of 20 basis points in this initiative.
This program, launched to revitalize China’s stock market amid an economic downturn, follows significant stimulus measures announced on September 24.
Investor enthusiasm has waned recently despite the initial market surge after the stimulus announcement.
Wang Mengying from Nanhua Futures stated that the swap’s main goal is to enhance market liquidity, as funds can only be used for stock purchases.
The swap scheme, worth 500 billion yuan, allows brokerages and insurers to exchange risk assets like stock ETFs for more liquid assets like treasury bonds.
Notable participants include China International Capital Corp, Citic Securities, and E Fund Management Co.
Additionally, over 20 Chinese companies, including China Petroleum and Sinopec, plan to use special central bank loans for share buybacks in a new funding initiative.
($1 = 7.1111 Chinese yuan)
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