China Lowers Share Buyback Financing Costs to Bolster Stock Market
The People's Bank of China will reduce the interest rate it charges banks through its share buyback lending scheme from 1.25% to 1%, while also making the initiative a permanent facility.
The program enables banks to provide financing to publicly listed companies seeking to repurchase their shares, as well as major investors looking to increase their ownership stakes.
Financial institutions were urged to increase lending through the scheme, although they will retain the flexibility to determine the rates charged to borrowers by applying an additional margin to the central bank's funding cost.
Since the initiative began in October 2024, participating banks have reached loan agreements totaling around 440 billion yuan ($66.2 billion), with more than $42 billion already distributed, according to the central bank.
China Expands Access to Financial Swap Facility
The central bank also plans to reduce charges associated with its swap program and allow additional financial institutions to participate.
Through the facility, securities companies, investment fund managers and insurance providers can exchange eligible assets for government bonds or central bank bills. These securities can then be used to secure financing for stock market investments.
The program currently has an outstanding balance of approximately $15.8 billion, according to the central bank.
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