SHANGHAI (Reuters) – On Monday, China’s central bank launched a new swap program to support the stock market, exchanging 50 billion yuan ($7 billion) with financial institutions.
The People’s Bank of China (PBOC) reported that 20 organizations took part, with a fee rate of 20 basis points.
This facility began on Friday, aiming to revive China’s stock market and bolster the economy affected by a property crisis and low consumption.
Chinese stocks saw a rise after major stimulus measures were announced on September 24, but the positive momentum has slowed recently.
Analyst Wang Mengying from Nanhua Futures stated, “The swap scheme aims to improve market liquidity, as funds can only be used to buy stocks.” She believes there is still potential for a bull market in China.
Under this scheme, worth 500 billion yuan, institutions can access funding more easily by swapping risk assets like stock ETFs for liquid assets like treasury bonds.
Participants include notable firms like China International Capital Corp (CICC) and Citic Securities.
Additionally, over 20 Chinese companies, including China Petroleum and Sinopec, plan to use special central bank loans for stock buybacks under another funding program, also worth 500 billion yuan.
($1 = 7.1111 Chinese yuan)
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