Regulators in Beijing have restructured the financing mechanism that enables banks to provide low-cost credit to companies for equity repurchases, transforming the support from a temporary measure into a long-term institutional arrangement. The People’s Bank of China lowered the relending rate for these stock-buyback loans to 1% from 1.25% on Nov 2, as part of a broader effort to encourage listed firms to manage their market value and boost investor confidence.
The rate adjustment follows a series of coordination meetings between the PBOC, the National Financial Regulatory Administration, and the China Securities Regulatory Commission to stabilize domestic equities. In tandem with the rate cut, the PBOC will launch a third round of its securities, fund and insurance company swap facility on Nov 3. More than 30 financial institutions have applied for the liquidity tool, with total request amounts exceeding 100 billion yuan.