The central bank has cut the relending interest rate for stock purchases and buybacks by 25 basis points to 1% to stimulate capital deployment. Commercial institutions can now add a reasonable spread to this base rate when establishing loan costs, maturities, and lending conditions for corporate borrowers. These operational adjustments follow high-level coordination between financial authorities, securities regulators, and major lenders to optimize the relending framework. By supplying specialized financial support, policymakers intend to reinforce the market capitalization of listed firms and their major shareholders.
Key points
Beijing is directing targeted liquidity into equity markets to support share repurchases…: Beijing is directing targeted liquidity into equity markets to support share repurchases and stabilize capital operations.
The revised framework grants commercial lenders flexibility in pricing stock loans to spe…: The revised framework grants commercial lenders flexibility in pricing stock loans to speed up capital disbursements.
The measures aim to enhance the market capitalization of publicly listed companies and th…: The measures aim to enhance the market capitalization of publicly listed companies and their primary shareholders.
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According to Reuters, the People's Bank of China (PBOC) said on Wednesday that it had stepped up the implementation of policies supporting share buybacks and increased relending to maintain stable capital market operations.
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The central bank will reduce the interest rate on relending for share buybacks and share acquisitions by 25 basis points to 1% from Wednesday.
The PBOC said banks would be allowed to add a reasonable spread to the relending rate when determining the maturity and interest rates of loans for stock repurchases and share acquisitions. The measure is aimed at accelerating loan disbursements and boosting the market capitalisation of listed companies and their major shareholders.
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The PBOC, along with financial and securities regulators, had convened major banks on Monday to discuss ways to optimise the relending policy.
The latest measures underline Beijing's efforts to encourage listed companies and their major shareholders to use financial support for…
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