The bank said 31 securities and fund companies had applied for more than 100 billion yuan in swaps, and cut its buyback relending rate from 1.25% to 1% as it made the scheme permanent.
The People’s Bank of China announced on 2 November that it had scheduled bidding for its third securities, funds and insurance companies swap operation for 3 November, after 31 securities and fund companies requested swaps worth more than 100 billion yuan. The requested amount is not a confirmed allocation.
The central bank also said its temporary relending scheme for share buybacks and purchases would become a long-term mechanism, and cut its funding rate from 1.25% to 1%, CNA reported. Financial institutions are to set loan rates on market terms, adding a reasonable markup to the central bank’s rate; borrowers will not all necessarily pay that rate.
The announcements followed an 8.5% fall in the benchmark CSI300 index in October, its worst month since early 2016. The Shanghai Composite rose 1.1% on 2 November, its largest one-day percentage gain since 27 August. In early trading on 3 November, the CSI300 and Shanghai Composite both fell roughly 1%, giving up the previous day’s gains, while the technology-focused STAR Composite fell 1.6%.
Sluggish consumption, a prolonged property-sector debt crisis and sharp falls in technology stocks have weakened investor confidence, CNA reported.
The swap facility allows eligible securities firms, fund companies and insurers to pledge assets, including bonds and shares in companies in the CSI300, in exchange for easily traded assets such as government bonds and central-bank bills. It is intended to improve the firms' access to funding for stock purchases.
The bank introduced the two support tools in October 2024. Its previous swap operations, in October 2024 and January 2025, totaled 105 billion yuan. The scheduled operation has a term of 1 year and may be extended depending on circumstances.
Hao Zhou, a Hong Kong-based analyst at Guotai Haitong Securities, said the new swaps signaled policymakers' commitment to market stability and investor confidence. He said global volatility and external uncertainty continued to weigh on investor sentiment.
Separately, the China Securities Regulatory Commission urged major index companies and leading technology firms to buy back shares. It also said it would encourage some newly established exchange-traded funds, which are investment funds traded on stock exchanges, to build their stock holdings faster and encourage fund managers to buy shares during a downturn.
Authorities are also studying whether to ease margin rules, which govern borrowing to trade securities, to increase market liquidity.
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Update ·
The update adds the previous day's Shanghai gain and the declines in the CSI300, Shanghai Composite and STAR Composite in early trading.
