The People’s Bank of China launches a 500 billion yuan funding scheme to support capital markets following stock declines, inviting financial institutions to apply and use assets as collateral.Indices in Shanghai and Hong Kong rose in response.
PBOC Launches New Funding Scheme
The People’s Bank of China (PBOC) has introduced a new funding scheme worth 500 billion yuan ($70.62 billion) to support the capital market. Financial institutions like securities firms, fund companies, and insurers can participate in the swap scheme to access funds for purchasing stocks. This initiative aims to stabilize the market, with the Shanghai Composite rising 2.64% mid-day, and Hong Kong’s Hang Seng Index increasing by nearly 4%.
Goals and Mechanism of the Scheme
In response to recent stock market declines, the PBOC is seeking to boost investor confidence and stimulate economic activities through this funding scheme. Announced on September 24, eligible entities can utilize assets such as bonds, stock ETFs, and CSI 300 Index holdings as collateral to obtain liquid assets like treasury bonds. The initial target of 500 billion yuan might be expanded as the program progresses.
The People’s Bank of China Initiative
The PBOC has rolled out a funding scheme of 500 billion yuan to provide support to the capital market. Financial institutions can leverage their assets as collateral for highly liquid assets under this program. This move comes as a response to the recent market declines and aims to enhance liquidity and support operations of securities firms, fund companies, and insurance firms participating in the initiative.
Source : PBOC Launches CNY 500 Billion Funding Initiative to Bolster Capital Market