China stock‑buying loan bids top 200b yuan

Banks’ applications for a People’s Bank of China stock‑purchase loan scheme and related re‑lending facilities have exceeded 200 billion yuan, roughly US$30 billion. The central bank announced the figure on Wednesday, saying the measures are intended to help maintain stable capital‑market operations after recent market weakness.

The applications represent demand for central‑bank‑backed financing. Nonetheless, the volume highlights strong interest from financial institutions in using the facility to support equity purchases.

To support the scheme, the PBOC is reducing the interest rate on re‑lending for share buybacks and share acquisitions by 0.25 percentage points to 1% from Wednesday. Banks are permitted to add a reasonable spread to this re‑lending rate when determining the terms and interest rates they offer to borrowers.

The central bank said this pricing flexibility is intended to accelerate loan disbursement and enhance the market capitalisation of listed companies and their major shareholders. By lowering funding costs at the central‑bank level, the authorities aim to make it more attractive for companies and key investors to finance equity purchases.

Under the programme, eligible commercial banks can obtain PBOC funding that they in turn lend to listed firms repurchasing their own shares and to major shareholders increasing their stakes. These transactions are meant to be authorised equity purchases rather than loans for unrelated corporate uses.

The scheme began in October 2024 with an initial 300 billion yuan in central‑bank funding and was later combined with a securities‑sector swap facility under an 800‑billion‑yuan framework. While the re‑lending portion supports buybacks and shareholder purchases, the separate swap facility provides liquidity to eligible financial institutions for stock investments.

The latest data on applications come after the CSI 300 Index fell about 8.5% in October, marking its largest monthly decline in more than a decade. Authorities have framed the re‑lending scheme as one of several measures aimed at bolstering capital‑market confidence and liquidity.

The PBOC, the National Financial Regulatory Administration and the China Securities Regulatory Commission met major financial institutions on November 2 to discuss optimising the re‑lending policy for share buybacks and purchases and strengthening market support. The central bank cited weak consumer demand, property‑sector problems and uncertainty over technology‑company valuations as factors weighing on investor sentiment.

While the programme can add demand for shares through buybacks and increased holdings by major shareholders, its ultimate impact will depend on how much of the 200 billion yuan in applications is approved, when funds reach borrowers, and the extent to which they are deployed into equity markets.